(12) INCOME TAXES

The components of the Company’s income tax expense (benefit) are as follows:

	Year Ended December 31,
	2016			2015			2014
	(Dollars in thousands)
Current taxes:
Federal	$	34,003		$	32,348		$	28,258
State		5,308			4,595			2,709
Deferred taxes		(2,048	)		(1,903	)		(3,683	)
Total income taxes	$	37,263		$	35,040		$	27,284

Income tax (benefit) expense applicable to securities transactions approximated $(21,000), $3.2 million and $574,000 for the years ended December 31, 2016, 2015 and 2014, respectively.

A reconciliation of tax expense at the federal statutory tax rate applied to income before taxes is presented in the following table:

	Year Ended December 31,
	2016			2015			2014
	(Dollars in thousands)
Tax expense at the federal statutory tax rate	$	37,778		$	35,424		$	31,910
Increase (decrease) in tax expense from:
Tax-exempt income, net		(756	)		(663	)		(571	)
Modified endowment life contracts		(852	)		(763	)		(755	)
State tax expense, net of federal tax benefit		3,250			2,898			1,469
Utilization of tax credits:
New markets tax credits		(1,254	)		(1,195	)		(1,108	)
Low-income housing tax credits, net of amortization		(1,424	)		(1,274	)		(1,209	)
Other tax credits		(319	)		(248	)		(1,979	)
Other, net		840			861			(473	)
Total tax expense	$	37,263		$	35,040		$	27,284

The net deferred tax asset consisted of the following and is reported in other assets:

	December 31,
	2016			2015
	(Dollars in thousands)
Provision for loan losses	$	18,748		$	16,110
Write-downs of other real estate owned		769			1,252
Deferred compensation		3,197			3,108
Stock-based compensation		2,441			3,201
Investments in partnership interests		4,603			3,651
Other		666			917
Gross deferred tax assets		30,424			28,239
Unrealized net gains on securities		(59	)		(962	)
Premium on securities of banks acquired		(453	)		(563	)
Intangibles		(5,365	)		(5,575	)
Basis difference related to tax credits		(3,435	)		(2,689	)
Depreciation		(6,758	)		(6,449	)
Leveraged lease		(1,408	)		(1,671	)
Other		(271	)		(606	)
Gross deferred tax liabilities		(17,749	)		(18,515	)
Net deferred tax asset	$	12,675		$	9,724

The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if applicable, in income tax expense. During the years ended December 31, 2016, 2015 and 2014, the Company did not recognize or accrue any interest and penalties related to unrecognized tax benefits. Federal and various state income tax statutes dictate that tax returns filed in any of the previous three reporting periods remain open to examination which includes the years 2014 to 2016. The Company has no open examinations with either the Internal Revenue Service or any state agency.

Management performs an analysis of the Company’s tax position annually and believes it is more likely than not that all of its tax positions will be utilized in future years.