Income Taxes

The Tax Act was signed into law in 2017. The enactment of the Tax Act required companies to revalue deferred tax assets and liabilities in light of the new federal income tax rate As a result, in 2017 the Corporation’s net deferred tax assets were written down by $6.2 million, with a corresponding increase to income tax expense. The majority of the provisions of the Tax Act became effective on January 1, 2018. The provisions that impact the Corporation include the reduction of the corporate income tax rate from 35% to 21%, changes to the deductibility of certain meals and entertainment expenses, and changes to the deductibility of executive compensation. The Tax Act also accelerated expensing of certain depreciable property for assets placed in service after September 27, 2017 and before January 1, 2023.

The following table presents the components of income tax expense:



(Dollars in thousands)
Years ended December 31,	2018			2017			2016
Current tax expense:
Federal		$15,460			$23,827			$19,444
State	2,863			2,201			2,061
Total current tax expense	18,323			26,028			21,505
Deferred tax expense (benefit):
Federal	63			5,717			796
State	(126		)	(30		)	72
Total deferred tax (benefit) expense	(63		)	5,687			868
Total income tax expense		$18,260			$31,715			$22,373

Total income tax expense varies from the amount determined by applying the Federal income tax rate to income before income taxes. The following table presents the reasons for the differences:



(Dollars in thousands)
	2018					2017					2016
Years ended December 31,	Amount			Rate		Amount			Rate		Amount			Rate
Tax expense at Federal statutory rate		$18,205		21.0	%		$27,174		35.0	%		$24,099		35.0	%
(Decrease) increase in taxes resulting from:
Tax-exempt income, net	(809		)	(0.9	)	(1,313		)	(1.7	)	(1,599		)	(2.3	)
Dividends received deduction	(45		)	(0.1	)	(55		)	(0.1	)	(58		)	(0.1	)
BOLI	(461		)	(0.5	)	(757		)	(0.9	)	(930		)	(1.3	)
Share-based compensation	(444		)	(0.5	)	(481		)	(0.6	)	—			—
Federal tax credits	(364		)	(0.4	)	(364		)	(0.5	)	(364		)	(0.5	)
Change in fair value of contingent consideration	(39		)	(0.1	)	(225		)	(0.3	)	(314		)	(0.5	)
State income tax expense, net of federal tax benefit	2,162			2.5		1,411			1.8		1,387			2.0
Adjustment to net deferred tax assets for enacted changes in federal tax law	—			—		6,170			7.9		—			—
Other	55			0.1		155			0.2		152			0.2
Total income tax expense		$18,260		21.1	%		$31,715		40.8	%		$22,373		32.5	%

The following table presents the approximate tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities:



(Dollars in thousands)
December 31,	2018			2017
Deferred tax assets:
Allowance for loan losses		$6,362			$6,225
Defined benefit pension obligations	420			1,767
Deferred compensation	3,688			3,334
Deferred loan origination fees	1,410			1,325
Share-based compensation	1,124			1,240
Net unrealized losses on securities available for sale	5,149			2,314
Other	1,917			2,281
Deferred tax assets	20,070			18,486
Deferred tax liabilities:
Amortization of intangibles	(1,918		)	(2,148		)
Deferred loan origination costs	(3,897		)	(3,550		)
Loan servicing rights	(858		)	(849		)
Other	(1,120		)	(1,200		)
Deferred tax liabilities	(7,793		)	(7,747		)
Net deferred tax asset		$12,277			$10,739

The Corporation’s net deferred tax asset is included in other assets in the Consolidated Balance Sheets. Management has determined that a valuation allowance is not required for any of the deferred tax assets since it is more-likely-than-not that these assets will be realized primarily through future reversals of existing taxable temporary differences or by offsetting projected future taxable income.

The Corporation had no unrecognized tax benefits as of December 31, 2018 and 2017.

The Corporation files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Corporation is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2015.