(12) INCOME TAXES

Total income taxes for the years ended December 31, 2016, 2015 and 2014 were allocated as follows:


	2016	2015	2014
	(In thousands)
Income tax expense	$ 63,716	$ 59,248	$ 50,652
Shareholders' equity for other comprehensive income (loss)	(5,655)	1,145	(8,481)
Shareholders' equity for stock option plans	(1,484)	(1,079)	(1,856)
Total	$ 56,577	$ 59,314	$ 40,315

The components of income tax expense attributable to operations were as follows for the years ended December 31, 2016, 2015 and 2014:


	2016	2015	2014
Current:	(In thousands)
Federal	$ 46,836	$ 62,369	$ 51,014
State	6,359	8,235	7,201
Deferred:
Federal	9,361	(10,391)	(6,870)
State	1,160	(965)	(693)
Total	$ 63,716	$ 59,248	$ 50,652

During 2016 and 2015, the Company recognized certain tax benefits related to stock options in the amount of $1.5 million and $1.1 million, respectively. Such benefits were recorded as a reduction of income taxes payable and an increase in capital surplus.

During 2016 and 2015, the Company reversed the deferred tax asset associated with stock options expiring during the current period in the amount of approximately $400,000 and $1.6 million, respectively. The reversal was recorded as a reduction of deferred tax assets and a reduction in capital surplus.

Income tax expense differed from the amount computed by applying the U.S. federal income tax rate of 35% to income before income taxes resulting from the following:


	2016	2015	2014
	(In thousands)
Tax expense at statutory rates	$ 68,755	$ 65,359	$ 58,591
Increase (decrease) in taxes resulting from:
State income taxes, net of federal tax benefit	4,875	4,709	4,230
Tax-exempt interest revenue	(6,269)	(6,881)	(7,371)
Tax-exempt earnings on life insurance	(2,655)	(2,589)	(3,076)
Deductible dividends paid on 401(k) plan	(737)	(617)	(458)
Tax credits	(1,999)	(1,871)	(1,771)
Penalties	1,065	1	-
Meals and entertainment	469	481	486
Other, net	212	656	21
Total	$ 63,716	$ 59,248	$ 50,652

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015 were as follows:


	2016	2015
Deferred tax assets:	(In thousands)
Loans, principally due to allowance for credit losses	$ 46,721	$ 47,825
Other real estate owned	989	3,069
Mark to market - securities	4,153	4,160
Accrued liabilities, principally due to
compensation arrangements and vacation accruals	15,149	24,153
Other	84	106
Unrecognized pension expense	35,407	34,654
Total gross deferred tax assets	102,503	113,967
Less: valuation allowance	-	-
Deferred tax assets	$ 102,503	$ 113,967
Deferred tax liabilities:
Lease transactions	$ 14,302	$ 18,868
Employment benefits	1,382	736
Premises and equipment, principally due
to differences in depreciation	17,418	19,294
Mortgage servicing rights	24,638	21,652
Intangible assets	11,972	11,310
Investments, principally due to interest income recognition	1,974	2,387
Deferred loan points	6,065	4,785
Other assets, principally due to expense recognition	9	9
Unrealized net gains on available-for-sale securities	3,861	8,764
Total gross deferred tax liabilities	81,621	87,805
Net deferred tax assets	$ 20,882	$ 26,162

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences existing at December 31, 2016.

There was no activity in unrecognized tax benefits for 2016, 2015 and 2014.

The Company recognizes accrued interest related to unrecognized tax benefits and penalties as a component of other noninterest expense. The Company accrued no interest for 2016, 2015, 2014.

Management does not expect that unrecognized tax benefits will significantly increase or decrease within the next 12 months.

The Company is subject to taxation in the United States and various states and local jurisdictions. The Company files a consolidated United States federal return. Based on the laws of the applicable state where the Company conducts business operations, the Company and its applicable subsidiaries either file a consolidated, combined or separate return. The tax years that remain open for examination for the Company’s major jurisdictions of the United States – federal, Mississippi, Arkansas, Tennessee, Alabama, Louisiana, Texas and Missouri - are 2013, 2014 and 2015.