(12) INCOME TAXES

The components of the Company’s income tax expense (benefit) are as follows:

	Year Ended December 31,
	2017		2016			2015
	(Dollars in thousands)
Current taxes:
Federal	$	39,569	$	34,003		$	32,348
State		5,914		5,308			4,595
Deferred taxes		4,383		(2,048	)		(1,903	)
Total income taxes	$	49,866	$	37,263		$	35,040

Income tax expense (benefit) applicable to securities transactions approximated $1.4 million, $(21,000) and $3.2 million for the years ended December 31, 2017, 2016 and 2015, respectively.

A reconciliation of tax expense at the federal statutory tax rate applied to income before taxes is presented in the following table:

	Year Ended December 31,
	2017			2016			2015
	(Dollars in thousands)
Tax expense at the federal statutory tax rate	$	47,708		$	37,778		$	35,424
Increase (decrease) in tax expense from:
Tax-exempt income, net		(829	)		(756	)		(663	)
Modified endowment life contracts		(921	)		(852	)		(763	)
Share based compensation excess tax benefit		(2,354	)		—			—
State tax expense, net of federal tax benefit		3,840			3,250			2,898
Write-down of net deferred tax asset		4,331			—			—
Utilization of tax credits:
New markets tax credits		(1,151	)		(1,254	)		(1,195	)
Low-income housing tax credits, net of amortization		(1,589	)		(1,424	)		(1,274	)
Other tax credits		—			(319	)		(248	)
Other, net		831			840			861
Total tax expense	$	49,866		$	37,263		$	35,040

Income tax expense for 2017 was impacted by the write down of net deferred tax asset of $4.3 million resulting from the federal tax rate change under the Tax Cuts and Jobs Act, enacted December 22, 2017. Deferred taxes as of December 31, 2017 are presented in the table below using the new federal tax rate of 21%. Deferred taxes as of December 31, 2016 are presented using the previous federal tax rate of 35%. The net deferred tax asset consisted of the following and is reported in other assets:

	December 31,
	2017			2016
	(Dollars in thousands)
Provision for loan losses	$	13,123		$	18,748
Unrealized net losses on securities		739			—
Write-downs of other real estate owned		473			769
Deferred compensation		2,113			3,197
Stock-based compensation		1,351			2,441
Investments in partnership interests		3,758			4,603
Other		275			666
Gross deferred tax assets		21,832			30,424
Unrealized net gains on securities		—			(59	)
Premium on securities of banks acquired		(219	)		(453	)
Intangibles		(3,359	)		(5,365	)
Basis difference related to tax credits		(2,713	)		(3,435	)
Depreciation		(4,563	)		(6,758	)
Leveraged lease		(821	)		(1,408	)
Prepaid expense deducted		(887	)		—
Other		(180	)		(271	)
Gross deferred tax liabilities		(12,742	)		(17,749	)
Net deferred tax asset	$	9,090		$	12,675

The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if applicable, in income tax expense. During the years ended December 31, 2017, 2016 and 2015, the Company did not recognize or accrue any interest and penalties related to unrecognized tax benefits. Federal and various state income tax statutes dictate that tax returns filed in any of the previous three reporting periods remain open to examination which includes the years 2015 to 2017. The Company has no open examinations with either the Internal Revenue Service or any state agency.

Management performs an analysis of the Company’s tax position annually and believes it is more likely than not that all of its tax positions will be utilized in future years.