INCOME TAXES

The components of income taxes are as follows:



	Years Ended December 31,
	2018			2017		2016
	(in thousands)
Current tax provision	$	30,459		$	10,565	$	22,308
Deferred tax expense (benefit)	(13,571		)	16,904		(987		)
Total provision for income taxes	$	16,888		$	27,469	$	21,321

In July 2018, the State of New Jersey enacted changes to the tax law that were retroactive to the beginning of 2018. Included in these changes was a surcharge in addition to the corporate tax. The surcharge will be 2.5% for 2018 and 2019, 1.5% for 2020 and 2021, and will revert to no surcharge in 2022. In addition to the surcharge, New Jersey adopted the concept of combined (consolidated) tax filings under a unitary concept for corporations that are part of an affiliated group beginning in 2019. As of July 1, 2018, the Company revalued its deferred tax assets based on the additional surcharge and the combined tax filings. Based on this revaluation, the Company recorded an increase in its net deferred tax asset of $943,000 to reflect the change in the state tax rates among its subsidiaries.

The Tax Cuts and Jobs Act was enacted on December 22, 2017, resulting in changes in the U.S. corporate tax rates, business-related exclusions, deductions and credits. Enactment of the Tax Cuts and Jobs Act requires the Company to reflect the changes associated with the law's provisions in its consolidated financial statements as of and for the year ended December 31, 2017. The Company recorded an increase in its net deferred tax asset of $1.3 million to reflect the reduction in the federal corporate income tax rate from 35% to 21%.

During 2017, the Company implemented a tax planning strategy which resulted in an increase in deferred tax liabilities, a higher deferred tax provision and a $1.9 million excise tax recorded through current tax expense. Consequently, as a result of the Tax Cuts and Jobs Act being passed and the effect of the tax planning strategy, the net impact on the financial statements was $602,000 in additional tax expense.

The income tax provision reconciled to the income taxes that would have been computed at the statutory federal rate of 21% for 2018 and 35% for both 2017 and 2016 is as follows:



	Years Ended December 31,
	2018			2017			2016
	(in thousands)
Federal income tax, at statutory rates	$	16,861		$	28,017		$	21,994
Increase (deduction) in taxes resulting from:
Tax-exempt income	(1,096		)	(1,652		)	(1,671		)
Excise tax on real estate investment trust ("REIT") dividend	—			1,945			—
Adjustment to net deferred tax asset for Tax Cuts and Jobs Act	—			(1,343		)	—
State income tax, net of federal income tax effect	1,880			931			552
Adjustment to net deferred tax asset for change in NJ tax law	(943		)	—			—
Excess tax benefits from employee share-based payments	(318		)	(587		)	—
Other, net	504			158			446
Provision for income taxes	$	16,888		$	27,469		$	21,321

The net deferred tax asset consisted of the following:



	December 31,
	2018		2017
Deferred tax assets:	(in thousands)
Allowance for loan and lease losses	$	11,651	$	10,662
Stock based compensation plans	865		769
Purchase accounting fair market value adjustments	1,192		1,441
Non-accrued interest	256		394
Deferred compensation	2,142		2,007
Depreciation and amortization	630		805
Other-than-temporary impairment loss on investment securities	59		77
Unrealized losses on securities available for sale	3,162		1,108
Other, net	585		675
Gross deferred tax assets	20,542		17,938
Deferred tax liabilities:
Core deposit intangible from acquired companies	516		664
Undistributed income from subsidiary not consolidated for tax return purposes (REIT)	149		12,015
Deferred loan costs	1,418		1,169
Prepaid expenses	459		524
Deferred gain on securities	166		116
Unfunded pension benefits	17		7
Loss on equity securities	36		—
Unrealized gains on hedging derivative	322		229
Other	270		357
Gross deferred tax liabilities	3,353		15,081
Net deferred tax assets	$	17,189	$	2,857

The Company evaluates the realizability of its deferred tax assets by examining its earnings history and projected future earnings and by assessing whether it is more likely than not that carryforwards would not be realized. Based upon the majority of the Company’s deferred tax assets having no expiration date, the Company’s earnings history, and the projections of future earnings, the Company’s management believes that it is more likely than not that all of the Company’s deferred tax assets as of December 31, 2018 will be realized.

The Company evaluates tax positions that may be uncertain using a recognition threshold of more likely than not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements. The Company had no unrecognized tax benefits or related interest or penalties at December 31, 2018 or 2017.

The Company is subject to U.S. federal income tax law as well as income tax of various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few significant exceptions, the Company is no longer subject to U.S. federal examinations by tax authorities for the years before 2016 or to state and local examinations by tax authorities for the years before 2015.