INCOME TAXES (Dollars In Thousands)

The provision for income taxes is summarized below:



Current Tax Expense:	2018			2017			2016
Federal	$	7,668		$	11,142		$	10,496
State	1,450			917			1,002
Total Current Tax Expense	9,118			12,059			11,498
Deferred Tax Expense (Benefit):
Federal	(40		)	(1,453		)	(69		)
State	(52		)	(77		)	(214		)
Total Deferred Tax Expense (Benefit)	(92		)	(1,530		)	(283		)

Total Provision for Income Taxes	$	9,026		$	10,529		$	11,215

The provisions for income taxes differed from the amounts computed by applying the U.S. Federal Income Tax Rate, 21% for 2018 and 35% for 2017 and 2016, to pre-tax income as a result of the following:



	2018			2017			2016
Computed Tax Expense at Statutory Rate	$	9,514		$	13,949		$	13,212
Increase (Decrease) in Income Taxes Resulting From:
Tax Cuts and Jobs Act impact on deferred remeasurement	—			(1,116		)	—
Tax-Exempt Income	(1,407		)	(2,537		)	(2,437		)
Nondeductible Interest Expense	50			52			40
State Taxes, Net of Federal Income Tax Benefit	1,093			698			554
Tax benefit from stock based compensation	(175		)	(134		)	—
Other Items, Net	(49		)	(383		)	(154		)
Total Provision for Income Taxes	$	9,026		$	10,529		$	11,215

The Tax Act was enacted on December 22, 2017 and introduced significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21%, among other changes. We do not believe that the other provisions within the Tax Act will have a material impact.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2018 and 2017 are presented below:



	2018		2017
Deferred Tax Assets:
Allowance for Loan Losses	$	5,131	$	4,730
Pension and Deferred Compensation Plans	2,764		2,595
Pension Liability Included in Accumulated Other Comprehensive Income	3,450		2,475
Other	342		357
Net Unrealized Losses on Securities Available-for-Sale Included in Accumulated Other Comprehensive Income	1,259		426
Total Gross Deferred Tax Assets	12,946		10,583
Valuation Allowance for Deferred Tax Assets	—		—
Total Gross Deferred Tax Assets, Net of Valuation Allowance	$	12,946	$	10,583
Deferred Tax Liabilities:
Pension Plans	$	5,502	$	5,487
Depreciation	1,149		955
Deferred Income	3,003		2,779
Net Unrealized Gains on Equity Securities	166		—
Goodwill	3,546		3,566
Total Gross Deferred Tax Liabilities	$	13,366	$	12,787

Management believes that the realization of the recognized gross deferred tax assets at December 31, 2018 and 2017 is more likely than not, based on historic earnings and expectations as to future taxable income.

Interest and penalties are recorded as a component of the provision for income taxes, if any. There are no current examinations of our Federal or state income tax returns, nor have we been notified of any up-coming examinations. Tax years 2015 through 2018 are subject to Federal and New York State examination. Management annually conducts an analysis of its tax positions and has concluded that it has no uncertain tax positions as of December 31, 2018.