5. INCOME TAXES

Our effective tax rate for the three and six-month periods ended June 30, 2017 was 23.0 percent and 23.9 percent, respectively, compared to 31.3 percent and 31.2 percent, respectively, for the same periods in 2016. Effective rates are dependent upon components of pretax earnings and the related tax effects. The effective rate was lower for the three and six-month periods ended June 30, 2017 due largely to the adoption of FASB ASU 2016-09, as the standard requires the excess tax benefit on share-based compensation to run through income tax expense in 2017 and forward. Prior to the adoption of FASB ASU 2016-09, excess tax benefits on share-based compensation were recorded directly to shareholders’ equity and had no impact on the effective tax rate. Additionally, lower levels of pre-tax earnings caused the tax favored adjustments to be larger on a percentage basis in 2017 compared to the prior year.

Income tax expense attributable to income from operations for the three and six-month periods ended June 30, 2017 and 2016 differed from the amounts computed by applying the U.S. federal tax rate of 35 percent to pretax income as a result of the following:


	For the Three-Month Periods Ended June 30,								For the Six-Month Periods Ended June 30,
	2017				2016				2017				2016
(in thousands)	Amount		%		Amount		%		Amount		%		Amount		%
Provision for income taxes at the statutory rate of 35%	$	11,912	35.0	%	$	14,819	35.0	%	$	21,168	35.0	%	$	30,777	35.0	%
Increase (reduction) in taxes resulting from:
Excess tax benefit on share-based compensation		(2,791)	(8.2)	%		—	0.0	%		(3,234)	(5.3)	%		—	0.0	%
Tax exempt interest income		(1,160)	(3.4)	%		(1,028)	(2.4)	%		(2,338)	(3.9)	%		(2,129)	(2.4)	%
Dividends received deduction		(405)	(1.2)	%		(484)	(1.1)	%		(935)	(1.5)	%		(1,049)	(1.2)	%
ESOP dividends paid deduction		(251)	(0.7)	%		(243)	(0.6)	%		(484)	(0.8)	%		(475)	(0.5)	%
Other items, net		523	1.5	%		200	0.4	%		266	0.4	%		340	0.3	%
Total tax expense	$	7,828	23.0	%	$	13,264	31.3	%	$	14,443	23.9	%	$	27,464	31.2	%