Federal and State Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

The following table is a summary of consolidated income tax expense:



	Years ended
(Dollars in thousands)	December 31, 2018		December 31, 2017	December 31, 2016
Current
Federal	$	21,510	29,555	30,461
State	11,960		9,183	9,283
Total current income tax expense	33,470		38,738	39,744
Deferred ¹
Federal	5,372		22,246	(70	)
State	1,489		3,641	(12	)
Total deferred income tax expense (benefit)	6,861		25,887	(82	)
Total income tax expense	$	40,331	64,625	39,662

______________________________


¹	Includes tax benefit of operating loss carryforwards of $443,000, $644,000 and $571,000 for the years ended December 31, 2018, 2017, and 2016, respectively.

Combined federal and state income tax expense differs from that computed at the federal statutory corporate income tax rate as follows:



	Years ended
	December 31, 2018		December 31, 2017		December 31, 2016
Federal statutory rate	21.0	%	35.0	%	35.0	%
State taxes, net of federal income tax benefit	4.8	%	4.6	%	3.8	%
Tax rate change	—	%	10.9	%	—	%
Tax-exempt interest income	(5.0	)%	(10.5	)%	(12.2	)%
Tax credits	(4.2	)%	(3.2	)%	(2.1	)%
Other, net	1.6	%	(1.1	)%	0.2	%
Effective income tax rate	18.2	%	35.7	%	24.7	%

The tax effect of temporary differences which give rise to a significant portion of deferred tax assets and deferred tax liabilities are as follows:



(Dollars in thousands)	December 31, 2018			December 31, 2017
Deferred tax assets
Allowance for loan and lease losses	$	33,313		32,890
Acquisition fair market value adjustments	6,380			4,139
Deferred compensation	6,251			5,640
Employee benefits	2,939			2,615
Net operating loss carryforwards	2,525			2,841
Available-for-sale debt securities	2,244			—
Interest rate swap agreements	955			2,379
Other real estate owned	801			5,126
Other	4,798			3,673
Total gross deferred tax assets	60,206			59,303
Deferred tax liabilities
Intangibles	(12,667		)	(4,161	)
Depreciation of premises and equipment	(10,776		)	(2,863	)
Deferred loan costs	(6,436		)	(5,854	)
FHLB stock dividends	(2,722		)	(2,602	)
Debt modification costs	(1,173		)	(1,591	)
Available-for-sale debt securities	—			(1,707	)
Other	(2,868		)	(2,181	)
Total gross deferred tax liabilities	(36,642		)	(20,959	)
Net deferred tax asset	$	23,564		38,344

The following schedule summarizes the years that remain subject to examination as of December 31, 2018: