Income Taxes

(In Thousands)

The following table is a summary of the Company’s temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to deferred income tax assets and liabilities and their approximate tax effects as of the dates presented.



	September 30,				December 31,
	2018		2017		2017
Deferred tax assets
Allowance for loan losses	$	14,030	$	20,421	$	13,966
Loans	20,044		25,585		15,062
Deferred compensation	9,441		10,857		7,093
Securities	—		2,573		3,659
Net unrealized losses on securities - OCI	8,340		1,942		—
Impairment of assets	1,774		2,383		1,748
Federal and State net operating loss carryforwards	21,478		3,338		2,419
Intangibles	—		—		—
Other	5,729		7,319		4,722
Total deferred tax assets	80,836		74,418		48,669
Deferred tax liabilities
Investment in partnerships	1,673		946		757
Intangibles	—		428		—
Fixed assets	3,645		1,429		3,163
Mortgage servicing rights	11,224		3,360		10,139
Junior subordinated debt	1,562		3,620		2,394
Other	1,747		1,770		1,859
Total deferred tax liabilities	19,851		11,553		18,312
Net deferred tax assets	$	60,985	$	62,865	$	30,357

The Tax Cuts and Jobs Act (the “Tax Act”), enacted on December 22, 2017, among other things, permanently lowered the statutory federal corporate tax rate from 35% to 21%, effective for tax years including or beginning January 1, 2018. As a result, the Company calculated taxes during 2018 based on a 21% federal corporate tax rate, whereas taxes were calculated in previous periods based on a 35% federal corporate tax rate. Under the guidance of ASC 740, “Income Taxes” (“ASC 740”), the Company revalued its net deferred tax assets on the date of enactment based on the reduction in the overall future tax benefit expected to be realized at the lower tax rate implemented by the new legislation. After reviewing the Company’s inventory of deferred tax assets and liabilities on the date of enactment and giving consideration to the future impact of the lower corporate tax rates and other provisions of the new legislation, the Company’s revaluation of its net deferred tax assets was $14,486, which was included as a reduction in “Income taxes” in the Consolidated Statements of Income for the year ended December 31, 2017. Although in the normal course of business the Company is required to make estimates and assumptions for certain tax items which cannot be fully determined at period end, the Company did not identify items for which the income tax effects of the Tax Act had not been completed as of December 31, 2017 and, therefore, considered its accounting for the tax effects of the Tax Act on its deferred tax assets and liabilities to have been completed as of December 31, 2017.

The Company acquired both federal and state net operating losses as part of the acquisition of Brand. The federal net operating losses are approximately $82,450. While the state net operating losses are still being evaluated, they are estimated to be approximately $65,347. The Company expects to utilize its federal and state net operating losses, including net operating losses acquired in previous acquisitions, before expiration. Because the benefits are expected to be fully realized, the Company recorded no valuation allowance against the net operating losses for the nine months ended September 30, 2018 or 2017 or the year ended December 31, 2017.