the foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this annual report on form 10-k. if one or more events related to these or other risks or uncertainties materialize , or if our underlying assumptions prove to be incorrect , actual results may differ materially from what we anticipate . accordingly , you should not place undue reliance on any such forward‑looking statements . any forward‑looking statement speaks only as of the date on which it is made and we do not undertake any obligation to publicly update or review any forward‑looking statement , whether as a result of new information , future developments or otherwise . new factors emerge from time to time and it is not possible for us to predict which will arise . in addition , we can not assess the impact of each factor on our business or the extent to which any factor , or combination of factors , may cause actual results to differ materially from those contained in any forward‑looking statements . the following discussion and analysis of our financial condition and results of operations should be read in conjunction with “ item 6. selected financial data ” and our consolidated financial statements and the accompanying notes included elsewhere in this annual report on form 10-k. this discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that we believe are reasonable but may prove to be inaccurate . certain risks , uncertainties and other factors , including those set forth in “ item 1a . – risk factors ” and elsewhere in this annual report on form 10-k , may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis . we assume no obligation to update any of these forward-looking statements . overview we are a bank holding company that operates through our wholly‑owned subsidiary , communitybank of texas national association , in houston and beaumont , texas . as of december 31 , 2017 , we had , on a consolidated basis , total assets of $ 3.1 billion , total loans of $ 2.3 billion , total deposits of $ 2.6 billion and total shareholders ' equity of $ 446.2 million . for the year ended december 31 , 2017 , net income was $ 27.6 million . the following discussion and analysis presents our financial condition and results of operations on a consolidated basis . however , because we conduct our material business operations through communitybank of texas , national association , the discussion and analysis relates to activities primarily conducted by the bank . as a bank holding company that operates through one segment , community banking , we generate most of our revenue from interest on loans and investments . we incur most of our expenses from interest expense on deposits and other borrowed funds and noninterest expense , such as salaries and employee benefits and occupancy expenses . changes in market interest rates and the interest rates we earn on interest‑earning assets or pay on interest‑bearing liabilities , as well as in the volume and types of interest‑earning assets , interest‑bearing and noninterest‑bearing liabilities , are usually the largest drivers of periodic changes in net interest spread , net interest margin and net interest income . fluctuations in market interest rates are driven by many factors , including governmental monetary policies , inflation , deflation , macroeconomic developments , changes in unemployment , the money supply , political and international conditions and conditions in domestic and foreign financial markets . periodic changes in the volume and types of loans in our loan portfolio are affected by , among other factors , economic and competitive conditions in texas , as well as developments affecting the real estate , technology , financial services , insurance , transportation , manufacturing and energy sectors within our target markets and throughout the state of texas . 58 hurricane harvey in august 2017 , hurricane harvey , a category 4 hurricane , caused catastrophic flooding and unprecedented damage to residences and businesses across southeast texas , including houston and beaumont and surrounding areas . as of december 31 , 2017 , the company has not experienced any material financial impact related to hurricane harvey , but will continue to monitor the residual effects of hurricane harvey on our business and customers . results of operations year ended december 31 , 2017 vs year ended december 31 , 2016 net income for 2017 was $ 27.6 million compared to $ 27.2 million for 2016 , an increase of $ 363,000 , or 1.3 % . this increase is primarily due to a $ 6.2 million increase in net interest income , a $ 4.8 million increase in noninterest expense and a $ 4.4 million increase in income taxes . see further analysis of these fluctuations in the related discussions that follow . replace_table_token_7_th net interest income our operating results depend primarily on our net interest income , calculated as the difference between interest income on interest‑earning assets , such as loans and securities and interest expense on interest‑bearing liabilities , such as deposits and borrowings . fluctuations in market interest rates impact the yield and rates paid on interest‑earning assets and interest‑bearing liabilities , respectively . changes in the amount and type of interest‑earning assets and interest‑bearing liabilities also impact our net interest income . to evaluate net interest income , we measure and monitor ( i ) yields on our loans and other interest‑earning assets , ( ii ) the costs of our deposits and other funding sources , ( iii ) our net interest spread and ( iv ) our net interest margin . story_separator_special_tag service charges on deposit accounts were $ 6.5 million for the year ended december 31 , 2016 , a decrease of $ 374,000 , or 5.41 % , over the same period in 2015. the decreases in these periods were due to a reduction of non‑sufficient and overdraft charges incurred by our deposit customers . net gain on sale of assets . net gain on sale of assets consists of the gains associated with the sale of fixed assets , sba loans , mortgage loans and other assets , including oreo and repossessed assets . net gain on sale of assets was $ 1.9 million for the year ended december 31 , 2016 , which was a $ 1.1 million , or 145.47 % , increase over the same period in 2015. this increase was primarily attributed to the sale of one of our branch locations . other . this category includes a variety of other income‑producing activities , including partnership and investment fund income , other loan fees , swap origination charges , wire transfer fees , credit card program income and other fee income . other noninterest income increased $ 1.0 million , or 65.55 % , in 2016 compared to 2015 due primarily to income recognized on our investments in partnerships and funds licensed under the sbic program of the sba of $ 629,000 and origination fees associated with swaps originated with and on behalf of , our loan customers of $ 174,000. noninterest expense generally , noninterest expense is composed of all employee expenses and costs associated with operating our facilities , obtaining and retaining customer relationships and providing bank services . the largest component of noninterest expense is salaries and employee benefits . noninterest expense also includes operational expenses , such as occupancy expenses , depreciation and amortization of our facilities and our furniture , fixtures and office equipment , professional and director fees , regulatory fees , including fdic assessments , data processing expenses , printing and office supplies , amortization of intangibles and advertising and marketing expenses . 67 for the year ended december 31 , 2016 , noninterest expense totaled $ 73.5 million , an increase of $ 2.5 million , or 3.58 % , compared to $ 71.0 million for the year ended december 31 , 2015. the following table presents , for the periods indicated , the major categories of noninterest expense : replace_table_token_16_th salaries and employee benefits . salaries and employee benefits are the largest component of noninterest expense and include payroll expense , the cost of incentive compensation , benefit plans , health insurance and payroll taxes . salaries and employee benefits were $ 44.2 million for the year ended december 31 , 2016 , an increase of $ 2.6 million , or 6.34 % , compared to $ 41.6 million for the same period in 2015. the increase was due primarily to an increase in incentive compensation , health insurance expenses , benefit plan expenses and payroll taxes . net occupancy expenses . net occupancy expenses were $ 10.1 million and $ 9.8 million for the years ended december 31 , 2016 and 2015 , respectively . this category includes building , leasehold , furniture , fixtures and equipment depreciation totaling $ 3.3 million for the year ended december 31 , 2016 and $ 3.6 million for the same period in 2015. the increase of $ 256,000 , or 2.60 % , in occupancy expenses for 2016 compared to 2015 was due primarily to increased lease expense due to our new corporate location and renewal of leases for existing locations , offset by the decrease in depreciation of leasehold improvement , furniture , fixtures and office equipment . merger expense . merger expense represents expenses incurred in and related to , the acquisition of mc bancshares , inc. the company entered into the definitive agreement in march 2014 and consummated the acquisition in february 2015. there were no merger expenses incurred in 2016. other . this category includes operating and administrative expenses , such as atm expenses , wire transfer expense , payroll processing expense , amortization of non‑compete agreements , operational losses ( debit cards , check fraud , etc . ) , software licenses , business development expenses ( i.e . , travel and entertainment , charitable contributions and club memberships ) and insurance . other noninterest expense increased to $ 4.1 million for the year ended december 31 , 2016 , compared to $ 3.1 million for the same period in 2015 , an increase of $ 1.0 million , or 33.07 % . the increase was primarily due to operational losses incurred on customer debit card transactions , losses associated with customer transactional accounts , amortization of non‑compete agreements for a full year and an increase in software licenses . income tax expense the amount of income tax expense we incur is impacted by the amounts of our pre‑tax income , tax‑exempt income and other nondeductible expenses . deferred tax assets and liabilities are reflected at current income tax rates in effect for the period in which the deferred tax assets and liabilities are expected to be realized or settled . as changes in tax laws or rates are enacted , deferred tax assets and liabilities are adjusted through the provision for income taxes . valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized . 68 for the years ended december 31 , 2016 and 2015 , income tax expense totaled $ 12.0 million and $ 10.8 million , respectively . our effective tax rates for the years ended december 31 , 2016 and 2015 were generally consistent and were 30.7 % and 30.9 % , respectively . financial condition total assets were $ 3.1 billion as of december 31 , 2017 , compared to $ 3.0 billion as of december 31 , 2016 , an increase of $ 129.6 million , or 4.39

liquidity and capital resources liquidity liquidity involves our ability to raise funds to support asset growth and acquisitions or reduce assets to meet deposit withdrawals and other payment obligations , to maintain reserve requirements and otherwise to operate on an ongoing basis and manage unexpected events . for the year ended december 31 , 2017 and the year ended december 31 , 2016 , liquidity needs were primarily met by core deposits , security and loan maturities and amortizing investment and loan portfolios . although access to advances from the fhlb are available as discussed above , we do not generally rely on this external funding source . on november 10 , 2017 , the company completed its initial public offering of 2,760,000 shares of its common stock at a price of $ 26.00 per share . proceeds from this offering , net of underwriting discounts and offering expenses of $ 7.2 million paid by us were $ 64.5 million . we intend to use the net proceeds to support our organic growth and for general corporate purposes , including maintenance of our required regulatory capital and potential future acquisition opportunities . the fhlb allows us to borrow on a blanket floating lien status collateralized by certain loans . as of december 31 , 2017 and 2016 , total borrowing capacity of $ 793.3 million and $ 767.8 million , respectively , was available under this arrangement .


 Write a concise suspicious activity report of the following text delimited by triple backquotes. Return your response as a formal report which covers the key points highlighting the location,dates,entity names and account holder information in chronological order of the text.
     ```liquidity and capital resources liquidity liquidity involves our ability to raise funds to support asset growth and acquisitions or reduce assets to meet deposit withdrawals and other payment obligations , to maintain reserve requirements and otherwise to operate on an ongoing basis and manage unexpected events . for the year ended december 31 , 2017 and the year ended december 31 , 2016 , liquidity needs were primarily met by core deposits , security and loan maturities and amortizing investment and loan portfolios . although access to advances from the fhlb are available as discussed above , we do not generally rely on this external funding source . on november 10 , 2017 , the company completed its initial public offering of 2,760,000 shares of its common stock at a price of $ 26.00 per share . proceeds from this offering , net of underwriting discounts and offering expenses of $ 7.2 million paid by us were $ 64.5 million . we intend to use the net proceeds to support our organic growth and for general corporate purposes , including maintenance of our required regulatory capital and potential future acquisition opportunities . the fhlb allows us to borrow on a blanket floating lien status collateralized by certain loans . as of december 31 , 2017 and 2016 , total borrowing capacity of $ 793.3 million and $ 767.8 million , respectively , was available under this arrangement .
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 Suspicious Activity Report : the foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this annual report on form 10-k. if one or more events related to these or other risks or uncertainties materialize , or if our underlying assumptions prove to be incorrect , actual results may differ materially from what we anticipate . accordingly , you should not place undue reliance on any such forward‑looking statements . any forward‑looking statement speaks only as of the date on which it is made and we do not undertake any obligation to publicly update or review any forward‑looking statement , whether as a result of new information , future developments or otherwise . new factors emerge from time to time and it is not possible for us to predict which will arise . in addition , we can not assess the impact of each factor on our business or the extent to which any factor , or combination of factors , may cause actual results to differ materially from those contained in any forward‑looking statements . the following discussion and analysis of our financial condition and results of operations should be read in conjunction with “ item 6. selected financial data ” and our consolidated financial statements and the accompanying notes included elsewhere in this annual report on form 10-k. this discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that we believe are reasonable but may prove to be inaccurate . certain risks , uncertainties and other factors , including those set forth in “ item 1a . – risk factors ” and elsewhere in this annual report on form 10-k , may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis . we assume no obligation to update any of these forward-looking statements . overview we are a bank holding company that operates through our wholly‑owned subsidiary , communitybank of texas national association , in houston and beaumont , texas . as of december 31 , 2017 , we had , on a consolidated basis , total assets of $ 3.1 billion , total loans of $ 2.3 billion , total deposits of $ 2.6 billion and total shareholders ' equity of $ 446.2 million . for the year ended december 31 , 2017 , net income was $ 27.6 million . the following discussion and analysis presents our financial condition and results of operations on a consolidated basis . however , because we conduct our material business operations through communitybank of texas , national association , the discussion and analysis relates to activities primarily conducted by the bank . as a bank holding company that operates through one segment , community banking , we generate most of our revenue from interest on loans and investments . we incur most of our expenses from interest expense on deposits and other borrowed funds and noninterest expense , such as salaries and employee benefits and occupancy expenses . changes in market interest rates and the interest rates we earn on interest‑earning assets or pay on interest‑bearing liabilities , as well as in the volume and types of interest‑earning assets , interest‑bearing and noninterest‑bearing liabilities , are usually the largest drivers of periodic changes in net interest spread , net interest margin and net interest income . fluctuations in market interest rates are driven by many factors , including governmental monetary policies , inflation , deflation , macroeconomic developments , changes in unemployment , the money supply , political and international conditions and conditions in domestic and foreign financial markets . periodic changes in the volume and types of loans in our loan portfolio are affected by , among other factors , economic and competitive conditions in texas , as well as developments affecting the real estate , technology , financial services , insurance , transportation , manufacturing and energy sectors within our target markets and throughout the state of texas . 58 hurricane harvey in august 2017 , hurricane harvey , a category 4 hurricane , caused catastrophic flooding and unprecedented damage to residences and businesses across southeast texas , including houston and beaumont and surrounding areas . as of december 31 , 2017 , the company has not experienced any material financial impact related to hurricane harvey , but will continue to monitor the residual effects of hurricane harvey on our business and customers . results of operations year ended december 31 , 2017 vs year ended december 31 , 2016 net income for 2017 was $ 27.6 million compared to $ 27.2 million for 2016 , an increase of $ 363,000 , or 1.3 % . this increase is primarily due to a $ 6.2 million increase in net interest income , a $ 4.8 million increase in noninterest expense and a $ 4.4 million increase in income taxes . see further analysis of these fluctuations in the related discussions that follow . replace_table_token_7_th net interest income our operating results depend primarily on our net interest income , calculated as the difference between interest income on interest‑earning assets , such as loans and securities and interest expense on interest‑bearing liabilities , such as deposits and borrowings . fluctuations in market interest rates impact the yield and rates paid on interest‑earning assets and interest‑bearing liabilities , respectively . changes in the amount and type of interest‑earning assets and interest‑bearing liabilities also impact our net interest income . to evaluate net interest income , we measure and monitor ( i ) yields on our loans and other interest‑earning assets , ( ii ) the costs of our deposits and other funding sources , ( iii ) our net interest spread and ( iv ) our net interest margin . story_separator_special_tag service charges on deposit accounts were $ 6.5 million for the year ended december 31 , 2016 , a decrease of $ 374,000 , or 5.41 % , over the same period in 2015. the decreases in these periods were due to a reduction of non‑sufficient and overdraft charges incurred by our deposit customers . net gain on sale of assets . net gain on sale of assets consists of the gains associated with the sale of fixed assets , sba loans , mortgage loans and other assets , including oreo and repossessed assets . net gain on sale of assets was $ 1.9 million for the year ended december 31 , 2016 , which was a $ 1.1 million , or 145.47 % , increase over the same period in 2015. this increase was primarily attributed to the sale of one of our branch locations . other . this category includes a variety of other income‑producing activities , including partnership and investment fund income , other loan fees , swap origination charges , wire transfer fees , credit card program income and other fee income . other noninterest income increased $ 1.0 million , or 65.55 % , in 2016 compared to 2015 due primarily to income recognized on our investments in partnerships and funds licensed under the sbic program of the sba of $ 629,000 and origination fees associated with swaps originated with and on behalf of , our loan customers of $ 174,000. noninterest expense generally , noninterest expense is composed of all employee expenses and costs associated with operating our facilities , obtaining and retaining customer relationships and providing bank services . the largest component of noninterest expense is salaries and employee benefits . noninterest expense also includes operational expenses , such as occupancy expenses , depreciation and amortization of our facilities and our furniture , fixtures and office equipment , professional and director fees , regulatory fees , including fdic assessments , data processing expenses , printing and office supplies , amortization of intangibles and advertising and marketing expenses . 67 for the year ended december 31 , 2016 , noninterest expense totaled $ 73.5 million , an increase of $ 2.5 million , or 3.58 % , compared to $ 71.0 million for the year ended december 31 , 2015. the following table presents , for the periods indicated , the major categories of noninterest expense : replace_table_token_16_th salaries and employee benefits . salaries and employee benefits are the largest component of noninterest expense and include payroll expense , the cost of incentive compensation , benefit plans , health insurance and payroll taxes . salaries and employee benefits were $ 44.2 million for the year ended december 31 , 2016 , an increase of $ 2.6 million , or 6.34 % , compared to $ 41.6 million for the same period in 2015. the increase was due primarily to an increase in incentive compensation , health insurance expenses , benefit plan expenses and payroll taxes . net occupancy expenses . net occupancy expenses were $ 10.1 million and $ 9.8 million for the years ended december 31 , 2016 and 2015 , respectively . this category includes building , leasehold , furniture , fixtures and equipment depreciation totaling $ 3.3 million for the year ended december 31 , 2016 and $ 3.6 million for the same period in 2015. the increase of $ 256,000 , or 2.60 % , in occupancy expenses for 2016 compared to 2015 was due primarily to increased lease expense due to our new corporate location and renewal of leases for existing locations , offset by the decrease in depreciation of leasehold improvement , furniture , fixtures and office equipment . merger expense . merger expense represents expenses incurred in and related to , the acquisition of mc bancshares , inc. the company entered into the definitive agreement in march 2014 and consummated the acquisition in february 2015. there were no merger expenses incurred in 2016. other . this category includes operating and administrative expenses , such as atm expenses , wire transfer expense , payroll processing expense , amortization of non‑compete agreements , operational losses ( debit cards , check fraud , etc . ) , software licenses , business development expenses ( i.e . , travel and entertainment , charitable contributions and club memberships ) and insurance . other noninterest expense increased to $ 4.1 million for the year ended december 31 , 2016 , compared to $ 3.1 million for the same period in 2015 , an increase of $ 1.0 million , or 33.07 % . the increase was primarily due to operational losses incurred on customer debit card transactions , losses associated with customer transactional accounts , amortization of non‑compete agreements for a full year and an increase in software licenses . income tax expense the amount of income tax expense we incur is impacted by the amounts of our pre‑tax income , tax‑exempt income and other nondeductible expenses . deferred tax assets and liabilities are reflected at current income tax rates in effect for the period in which the deferred tax assets and liabilities are expected to be realized or settled . as changes in tax laws or rates are enacted , deferred tax assets and liabilities are adjusted through the provision for income taxes . valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized . 68 for the years ended december 31 , 2016 and 2015 , income tax expense totaled $ 12.0 million and $ 10.8 million , respectively . our effective tax rates for the years ended december 31 , 2016 and 2015 were generally consistent and were 30.7 % and 30.9 % , respectively . financial condition total assets were $ 3.1 billion as of december 31 , 2017 , compared to $ 3.0 billion as of december 31 , 2016 , an increase of $ 129.6 million , or 4.39

