Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income tax expense (benefit) attributable to continuing operations

Income tax expense attributable to continuing operations for each of the years ended December 31 is as follows (in thousands):


	2019		2018		2017
Current tax expense :
Federal	$	77,422	$	73,921	$	63,496
State	4,538		4,822		860
Total current tax expense	81,960		78,743		64,356
Deferred tax expense:
Federal	12,446		10,162		26,339
State	2,250		1,603		1,826
Deferred tax revaluation expense	—		—		31,486
Total deferred tax expense	14,696		11,765		59,651
Total income tax expense	$	96,656	$	90,508	$	124,007

Income tax rate reconciliation

Pinnacle Financial's income tax expense differs from the amounts computed by applying the Federal income tax statutory rates of 21% to income before income taxes for 2019 and 2018 and 35% for 2017. A reconciliation of the differences for each of the years in the three-year period ended December 31, 2019 is as follows (in thousands):


	2019		2018		2017
Income tax expense at statutory rate	$	104,483	$	94,489	$	104,295
State excise tax expense, net of federal tax effect	5,363		5,076		1,746
Tax-exempt securities	(11,078)		(7,222)		(5,666)
Federal tax credits	(1,704)		(845)		(434)
Bank owned life insurance	(3,646)		(2,764)		(2,778)
Insurance premiums	(238)		(112)		(283)
Revaluation of deferred tax assets and liabilities due to Tax Cuts and Jobs Act	—		—		31,486
Excess tax benefits associated with equity compensation	(1,011)		(2,966)		(5,366)

Other items	4,487		4,852		1,007
Income tax expense	$	96,656	$	90,508	$	124,007

Components of deferred income taxes included in other assets

The components of deferred income taxes included in other assets in the accompanying consolidated balance sheets at December 31, 2019 and 2018 are as follows (in thousands):


	2019		2018
Deferred tax assets:
Loan loss allowance	$	23,051	$	20,449
Loans	20,808		29,453
Insurance	673		1,955
Accrued liability for supplemental retirement agreements	7,308		6,231
Restricted stock and stock options	10,515		9,026
Securities	—		15,974
Cash flow hedge	1,373		459
Equity method investment	425		602
Lease liability	22,782		2,099
Other real estate owned	691		1,158
Net federal operating loss carryforward and credits	5,954		13,754
Annual incentive compensation	12,626		9,996
Other deferred tax assets	1,810		3,343
Total deferred tax assets	108,016		114,499

Deferred tax liabilities:
Depreciation and amortization	12,455		11,769
Core deposit and other intangible assets	13,253		11,475
Securities	6,978		—
REIT dividends	1,650		1,589
FHLB related liabilities	925		925
Right-of-use assets and other leasing transactions	21,169		639
Subordinated debt	2,050		1,134
Partnership interests	3,534		459
Other deferred tax liabilities	1,875		1,758
Total deferred tax liabilities	63,889		29,748
Net deferred tax assets	$	44,127	$	84,751

Rollforward of uncertain tax positions

A reconciliation of the beginning and ending unrecognized tax benefit related to state uncertain tax positions is as follows (in thousands):


	2019		2018		2017
Balance at January 1,	$	5,083	$	2,838	$	1,274
Increases due to tax positions taken during the current year	1,827		2,245		1,564
Increases due to tax positions taken during a prior year	—		—		—
Decreases due to the lapse of the statute of limitations during the current year	—		—		—
Decreases due to settlements with the taxing authorities during the current year	—		—		—
Balance at December 31,	$	6,910	$	5,083	$	2,838