Income taxes:

Allocation of federal and state income taxes between current and deferred portions is as follows:



	For the year ended December 31,
	2018		2017		2016
Current	$	19,259	$	14,629	$	12,476
Deferred	6,359		6,458		9,257
Total	$	25,618	$	21,087	$	21,733

Federal income tax expense differs from the statutory federal rates of 21% for the year ended December 31, 2018 and 35% for the years ended December 31, 2017 and 2016 due to the following:



	For the year ended December 31,
	2018					2017					2016
Federal taxes calculated at statutory rate	$	22,230		21.0	%	$	25,720		35.0	%	$	5,061		8.1	%
Increase (decrease) resulting from:
State taxes, net of federal benefit	4,666			4.4	%	3,053			4.2	%	3,664			5.9	%
Revaluation of net deferred tax liability as a result of the Tax Cuts and Jobs Act	—			—	%	(5,894		)	(8.0	)%	—			—	%
Conversion as of September 16, 2016 to C Corporation	—			—	%	—			—	%	13,181			21.1	%
Benefit of equity based compensation	(870		)	(0.8	)%	(310		)	(0.4	)%	(786		)	(1.3	)%
Municipal interest income, net of interest disallowance	(837		)	(0.8	)%	(1,402		)	(1.9	)%	(633		)	(1.0	)%
Bank owned life insurance	(51		)	—	%	(85		)	(0.2	)%	(24		)	—	%
Stock offering costs	141			0.1	%	—			—	%	—			—	%
Other	339			0.3	%	5			—	%	1,270			2.1	%
Income tax expense, as reported	$	25,618		24.2	%	$	21,087		28.7	%	$	21,733		34.9	%

The components of the net deferred tax liability at December 31, 2018 and 2017, are as follows:



	December 31,
	2018			2017
Deferred tax assets:
Allowance for loan losses	$	7,539		$	6,264
Amortization of core deposit intangible	1,012			759
Deferred compensation	5,878			6,158
Unrealized loss on available-for-sale debt securities	3,299			988
Other	1,998			3,599
Subtotal	19,726			17,768
Deferred tax liabilities:
FHLB stock dividends	(550		)	(550		)
Depreciation	(4,812		)	(4,115		)
Cash flow hedges	(736		)	—
Mortgage servicing rights	(23,146		)	(19,830		)
Other	(7,145		)	(5,131		)
Subtotal	(36,389		)	(29,626		)
Net deferred tax liability	$	(16,663	)	$	(11,858	)

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law, among other things permanently reduced the corporate tax rate from 35 percent to 21 percent, effective for tax years beginning January 1, 2018. 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 liabilities resulted in a $5,894 reduction, which was included in “income taxes” in the Consolidated Statements of Income.

In connection with the initial public offering, as discussed in Note 1, the Company terminated its S-corporation status and became a taxable entity (“C corporation”) on September 16, 2016. The reported income tax expense for the year ended December 31, 2016 reflects the increase in the deferred tax net liability of $13,181 from the conversion in the taxable status. The deferred tax net liability is the result of timing differences in the recognition of income/deductions for generally accepted accounting principles (“GAAP”) and tax purposes. The consolidated statements of income present unaudited pro forma statements of income for the year ended December 31, 2016. Additionally, in recording the impact of the conversion to a C corporation, the Company recorded a deferred income tax expense of $2,955 related to the unrealized gain on available for sale securities through the income statement in accordance with ASC 740-20-45-8; therefore, the amount shown in other comprehensive income has not been reduced by the above expense. This difference will remain in OCI until the underlying securities are sold or mature in accordance with the portfolio approach allowed under ASC 740.

Tax periods for all fiscal years after 2014 remain open to examination by the federal and state taxing jurisdictions to which the Company is subject.