5. INCOME TAXES

Our effective tax rate for the three and nine-month periods ended September 30, 2018 was 15.1 percent and 15.4 percent. Catastrophic losses incurred in the third quarter of 2017 resulted in a pretax loss and a 301.2 percent effective tax rate for the third quarter and a 19.9 percent effective rate for the nine-month period ended September 30, 2017. The Tax Cuts and Jobs Act of 2017 (TCJA) lowered the federal corporate tax rate from 35 percent to 21 percent effective January 1, 2018, which accounts for the majority of the decrease in effective tax rate for the nine-month period over the prior year. Effective rates are also dependent upon components of pretax earnings and the related tax effects. Tax favored investment activity was lower in 2018, which resulted in a lower spread between the corporate rate and effective rate when compared to 2017. There have been no changes to the provisional amounts that we recorded in the fourth quarter of 2017 associated with the TCJA, as guidance has not yet been finalized by the Internal Revenue Service. Accounting for the tax effects of the enactment of the TCJA will be completed in the fourth quarter of 2018.

Income tax expense attributable to income from operations for the three and nine-month periods ended September 30, 2018 and 2017 differed from the amounts computed by applying the U.S. federal tax rate of 21 percent and 35 percent, respectively, to pretax income by the items detailed in the below table. In interim periods, income taxes are adjusted to reflect the effective tax rate we anticipate for the year, with adjustments flowing through the other items line.


	For the Three-Month Periods Ended September 30,								For the Nine-Month Periods Ended September 30,
	2018				2017				2018				2017
(in thousands)	Amount		%		Amount		%		Amount		%		Amount		%
Provision for income taxes at the statutory rate of 21% in 2018 and 35% in 2017	$	9,733	21.0	%	$	(302)	35.0	%	$	21,061	21.0	%	$	20,866	35.0	%
Increase (reduction) in taxes resulting from:
Excess tax benefit on share-based compensation		(2,273)	(4.9)	%		(477)	55.3	%		(4,340)	(4.3)	%		(3,711)	(6.2)	%
Tax exempt interest income		(375)	(0.8)	%		(1,187)	137.7	%		(1,460)	(1.5)	%		(3,525)	(5.9)	%
Dividends received deduction		(150)	(0.3)	%		(553)	64.2	%		(516)	(0.5)	%		(1,488)	(2.5)	%
ESOP dividends paid deduction		(139)	(0.3)	%		(240)	27.9	%		(423)	(0.4)	%		(724)	(1.2)	%
Other items, net		181	0.4	%		163	(18.9)	%		1,128	1.1	%		429	0.7	%
Total tax expense (benefit)	$	6,977	15.1	%	$	(2,596)	301.2	%	$	15,450	15.4	%	$	11,847	19.9	%