Income Taxes

The Corporation records its federal income tax expense using its estimate of the effective income tax rate expected for the full year and applies that rate on a year-to-date basis. The fluctuations in the Corporation's effective federal income tax rate reflect changes each period in the proportion of interest income exempt from federal taxation, nondeductible transaction costs and other nondeductible expenses relative to pretax income and tax credits.

A reconciliation of expected income tax expense at the federal statutory income tax rate and the amounts recorded in the Consolidated Financial Statements were as follows:



	Three Months Ended March 31,
	2017					2016
(Dollars in thousands)	Amount			Rate		Amount			Rate
Tax at statutory rate	$	20,951		35.0	%	$	11,677		35.0	%
Changes resulting from:
Tax-exempt interest income	(1,757		)	(2.9	)	(1,139		)	(3.4	)
State taxes, net of federal benefit	212			0.4		—			—
Change in valuation allowance	11			—		—			—
Bank-owned life insurance adjustments	(344		)	(0.6	)	(68		)	(0.2	)
Income tax credits, net	(695		)	(1.2	)	(797		)	(2.4	)
Tax benefits in excess of compensation costs on share-based payments	(6,134		)	(10.2	)	(343		)	(1.0	)
Other, net	13			—		427			1.2
Income tax expense	$	12,257		20.5	%	$	9,757		29.2	%