Hanmi Financial Corporation Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	Year Ended December 31,
	2017		2016		2015
	(In thousands)
Unrecognized tax benefits at beginning of year	$	1,039	$	934	$	1,765
Gross increases for tax positions of prior years	—		105		—
Lapse of statute of limitations	—		—		(831		)
Unrecognized tax benefits at end of year	$	1,039	$	1,039	$	934

A summary of the provision for income taxes was as follows:

Deferred tax assets and liabilities were as follows:



	Year Ended December 31,
	2017			2016			2015
	(In thousands)
Deferred tax assets:
Allowance for loan and lease losses	$	9,282		$	13,932		$	18,205
Depreciation	192			—			—
Purchase accounting	4,685			7,492			13,156
Net operating loss carryforward	18,648			16,876			21,511
Unrealized loss on securities available for sale	919			1,695			859
Indemnified assets	701			1,441			152
Tax credit	1,241			3,516			3,939
State taxes	1,489			2,231			1,539
Other	3,724			5,726			5,040
Total deferred tax assets	40,881			52,909			64,401
Deferred tax liabilities:
Mark to market	(4,879		)	(3,960		)	(10,469		)
Depreciation	—			(396		)	(705		)
Other	(797		)	(1,190		)	(1,132		)
Total deferred tax liabilities	(5,676		)	(5,546		)	(12,306		)
Valuation Allowance	(2,750		)	(1,031		)	—
Net deferred tax assets	$	32,455		$	46,332		$	52,095

Reconciliation between the federal statutory income tax rate and the effective tax rate is shown in the following table:



	Year Ended December 31,
	2017		2016		2015
Federal statutory income tax rate	35.00	%	35.00	%	35.00	%
State taxes, net of federal tax benefits	6.64	%	7.04	%	8.32	%
Tax-exempt municipal securities	(0.24	)%	(0.26	)%	(0.26	)%
Tax credit - federal	(2.37	)%	(2.50	)%	(2.51	)%
Federal rate adjustment, net of federal benefit of state	4.18	%	—	%	—	%
Other	(0.58	)%	(2.48	)%	0.95	%
Effective tax rate	42.63	%	36.80	%	41.50	%