INCOME TAXES

The income tax expense included in the accompanying statements of income consists of the following (in thousands):



	Years Ended December 31,
	2018		2017		2016
Current income tax expense	$	4,009	$	12,607	$	8,557
Deferred income tax expense	6,154		3,514		1,768
Income tax expense	$	10,163	$	16,121	$	10,325

The components of the net deferred tax asset (liability) as of December 31, 2018 and 2017 are summarized below (in thousands):



	Assets		Liabilities
Allowance for loan losses	$	5,673	$
Retirement and other benefit plans			(2,519	)
Premises and equipment			(6,360	)
Core deposit intangible			(2,748	)
Unrealized losses on securities available for sale	7,926
Effective hedging derivatives			(1,761	)
Fair value adjustment on loans	1,894
Fair value adjustment on time deposits			(6	)
Unfunded status of defined benefit plan	6,979
State business tax credit	483
Stock-based compensation	797
Other			(582	)
Gross deferred tax assets (liabilities)	23,752		(13,976	)
Net deferred tax asset at December 31, 2018	$	9,776

Allowance for loan losses	$	4,364	$
Retirement and other benefit plans			(2,102	)
Premises and equipment			(5,716	)
Core deposit intangible			(3,660	)
Unrealized losses on securities available for sale	4,285
Effective hedging derivatives			(1,701	)
Fair value adjustment on loans	2,607
Fair value adjustment on time deposits			(54	)
Alternative minimum tax credit	6,943
Unfunded status of defined benefit plan	7,018
State business tax credit	544
Stock-based compensation	642
Other			(966	)
Gross deferred tax assets (liabilities)	26,403		(14,199	)
Net deferred tax asset at December 31, 2017	$	12,204

A reconciliation of tax at statutory rates and total tax expense is as follows (dollars in thousands):



	Years Ended December 31,
	2018					2017					2016
	Amount			Percent of Pre-Tax Income		Amount			Percent of Pre-Tax Income		Amount			Percent of Pre-Tax Income
Statutory tax expense	$	17,703		21.0	%	$	24,652		35.0	%	$	20,886		35.0	%
Increase (decrease) in taxes from:
Tax rate changes	(767		)	(0.9	)%	2,416			3.4	%	—			—
Tax exempt interest	(6,257		)	(7.4	)%	(10,195		)	(14.5	)%	(9,879		)	(16.6	)%
Bank owned life insurance	(613		)	(0.7	)%	(885		)	(1.2	)%	(915		)	(1.5	)%
Share-based compensation	(191		)	(0.2	)%	(482		)	(0.7	)%	—			—
Acquisition costs	—			—		467			0.7	%	—			—
State business tax	297			0.3	%	68			0.1	%	71			0.1	%
Other, net	(9		)	—		80			0.1	%	162			0.3	%
Income tax expense	$	10,163		12.1	%	$	16,121		22.9	%	$	10,325		17.3	%

The Tax Cuts and Jobs Act (“Tax Act”) was enacted on December 22, 2017. The Tax Act reduced the U.S. federal corporate tax rate from 35% to 21%. We remeasured certain deferred tax assets and liabilities as of December 22, 2017 based on the rates at which they are expected to reverse in the future, which is generally 21%, by recording a provisional amount of $2.4 million. At December 31, 2018, we had completed our accounting for all of the enactment-date income tax effects of the Tax Act. During 2018, we recognized a benefit of $767,000 made to the provisional amounts recorded as of December 22, 2017 with the remeasurement of the net deferred tax asset. The Tax Act also repealed the existing Alternative Minimum Tax (“AMT”). As of December 31, 2018, we had fully realized the remaining AMT tax credit of $7.8 million.

We file income tax returns in the U.S. federal jurisdiction and in certain states. We are no longer subject to U.S. federal income tax examinations by tax authorities for years before 2015 or Texas state tax examinations by tax authorities for years before 2014. No valuation allowance for deferred tax assets was recorded at December 31, 2018 or 2017 as management believes it is more likely than not that all of the deferred tax assets will be realized in future years. Unrecognized tax benefits were not material at December 31, 2018 or 2017.