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):



	2018		2017
Allowance for loan losses	$	3,742	$	4,385
Deferred compensation payable	2,734		2,517
Underfunded pension liability	1,794		1,527
Accrued expenses	2,276		1,057
Impaired asset losses	1,201		607
Unrealized securities losses	1,871		166
Intangible assets	783		438
Other	6,492		3,577
Total Deferred Tax Assets	20,893		14,274
Other	3,555		2,361
Total Deferred Tax Liabilities	3,555		2,361
Net Deferred Tax Assets	$	17,338	$	11,913

No valuation allowance for deferred tax assets was recorded at December 31, 2018 and 2017 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 re-measured its deferred tax assets and liabilities, which resulted in a provisional charge to earnings of $7.1 million in 2017,which is included in total deferred tax expense in the table below. Upon final analysis of available information and refinement of the Company's calculations during 2018, the Company increased its provisional amount by $0.1 million,which is included as a component of income tax expense. Significant components of the provision for income taxes are as follows (in thousands):



	2018			2017		2016
Current:
Federal	$	16,846		$	20,090	$	20,100
State	2,413			1,436		1,166
Total current tax expense	19,259			21,526		21,266

Total deferred tax expense	(1,244		)	14,909		3,817
Income tax expense	$	18,015		$	36,435	$	25,083

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):



	2018			2017			2016

Computed federal taxes at statutory rate	$	18,483		$	31,761		$	27,025
State income taxes, net of federal tax benefit	1,730			1,321			888
Tax effects of:
Tax-exempt interest income	(694		)	(1,098		)	(708		)
Bank-owned life insurance	(649		)	(1,474		)	(1,164		)
Change in statutory tax rate	—			7,070			—
Other items, net	(855		)	(1,145		)	(958		)
Income tax expense	$	18,015		$	36,435		$	25,083

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):



	2018			2017

Beginning balance	$	1,889		$	1,847
Additions for current year tax positions	184			325
Additions for prior year tax positions	241			226
Decreases related to lapse of applicable statute of limitation	(503		)	(509		)
Ending balance	$	1,811		$	1,889

Interest and penalties on income tax uncertainties are included in income tax expense. During 2018, 2017 and 2016, the provision related to interest and penalties was less than $0.2 million in each period. The balance of accrued interest and penalties at December 31, 2018 and 2017 was less than $0.5 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, 2015 and forward.