INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):



	2017		2016
Previously securitized loans	$	441	$	3,950
Allowance for loan losses	4,385		7,303
Deferred compensation payable	2,517		4,099
Underfunded pension liability	1,527		2,739
Accrued expenses	1,057		1,721
Impaired asset losses	607		4,625
Unrealized securities losses	166		1,338
Intangible assets	438		1,312
Other	3,136		4,716
Total Deferred Tax Assets	14,274		31,803
Other	2,361		3,760
Total Deferred Tax Liabilities	2,361		3,760
Net Deferred Tax Assets	$	11,913	$	28,043

No valuation allowance for deferred tax assets was recorded at December 31, 2017 and 2016 as the Company believes it is more likely than not that all of the deferred tax assets will be realized because they were supported by recoverable taxes paid in prior years.

On December 22, 2017, the President signed the Tax Cut and Jobs Act ("TCJA") into law. Among other things, the TCJA reduced the corporate income tax rate from 35% to 21%, effective January 1, 2018. As a result of this decrease in the corporate income tax, the Company reassessed its deferred tax assets and liabilities, which resulted in a charge to earnings of $7.1 million. This provisional amount is included in total deferred tax expense in the table below. Significant components of the provision for income taxes are as follows (in thousands):



	2017		2016		2015
Current:
Federal	$	20,090	$	20,100	$	20,830
State	1,436		1,166		957
Total current tax expense	21,526		21,266		21,787

Total deferred tax expense	14,909		3,817		6,627
Income tax expense	$	36,435	$	25,083	$	28,414

A reconciliation of the significant differences between the federal statutory income tax rate and the Company’s effective income tax rate is as follows (in thousands):



	2017			2016			2015

Computed federal taxes at statutory rate	$	31,761		$	27,025		$	28,879
State income taxes, net of federal tax benefit	1,321			888			887
Tax effects of:
Tax-exempt interest income	(1,098		)	(708		)	(498		)
Bank-owned life insurance	(1,474		)	(1,164		)	(1,181		)
Change in tax rate	7,070			—			—
Other items, net	(1,145		)	(958		)	327
Income tax expense	$	36,435		$	25,083		$	28,414

The entire amount of the Company’s unrecognized tax benefits, if recognized, would favorably affect the Company’s effective tax rate. The Company anticipates that it will release $0.5 million over the next 12 months. A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in thousands):



	2017			2016

Beginning balance	$	1,847		$	2,164
Additions for current year tax positions	325			339
Additions for prior year tax positions	226			196
Decreases related to lapse of applicable statute of limitation	(509		)	(852		)
Ending balance	$	1,889		$	1,847

Interest and penalties on income tax uncertainties are included in income tax expense. During 2017, 2016 and 2015, the provision related to interest and penalties was $0.1 million in each period. The balance of accrued interest and penalties at December 31, 2017 and 2016 was $0.3 million.

The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state taxing authorities for the years ended December 31, 2014 through 2016.