12.	Income Taxes

The significant components of income tax expense attributable to operations are as follows:

	Years ended December 31,
(In thousands)	2017			2016		2015
Current:
Federal	$	35,839		$	30,492	$	32,871
State		6,599			5,628		4,329
Total Current	$	42,438		$	36,120	$	37,200

Deferred:
Federal	$	3,850		$	3,994	$	2,521
State		(278	)		278		482
Total Deferred	$	3,572		$	4,272	$	3,003
Total income tax expense	$	46,010		$	40,392	$	40,203

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes significant changes to the U.S. corporate income tax system including: a federal corporate rate reduction from 35% to 21%. The Tax Act also establishes new tax laws that will affect years subsequent to 2017. ASC 740, Income Taxes, requires a company to record the effects of a tax law change in the period of enactment, however shortly after the enactment of the Tax Act, the SEC staff issued Staff Accounting Bulletin 118 ("SAB 118"), which allows a company to record a provisional amount when it does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change in the tax law. The measurement period ends when the company has obtained, prepared and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year.

In connection with our initial analysis of the impact of the Tax Act, the Company recorded a $4.4 million adjustment in the year ended December 31, 2017 for remeasurement of deferred tax assets and liabilities for the corporate rate reduction. A certain amount of this adjustment is provisional, related to consideration of depreciation, compensation matters and different interpretations by various regulatory authorities.

In the first quarter of 2017, the Company adopted the provision of Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, requiring that all excess tax benefits and tax deficiencies associated with equity-based compensation be recognized as an income tax benefit or expense in the income statement. Previously, tax effects resulting from changes in the Company's share price subsequent to the grant date were recorded through stockholders' equity at the time of vesting or exercise. The adoption of ASU 2016-09 resulted in income tax benefits of $1.8 million in the year ended December 31, 2017.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

	December 31,
(In thousands)	2017			2016
Deferred tax assets:
Allowance for loan losses	$	17,390		$	24,925
Deferred compensation		7,230			11,578
Postretirement benefit obligation		2,159			2,929
Fair value adjustments from acquisitions		919			1,883
Unrealized losses on securities		3,715			3,259
Accrued liabilities		769			1,775
Stock-based compensation expense		2,642			4,817
Other		711			1,148
Total deferred tax assets	$	35,535		$	52,314
Deferred tax liabilities:
Pension benefits	$	12,439		$	17,303
Amortization of intangible assets		11,110			17,557
Premises and equipment, primarily due to accelerated depreciation		2,792			4,375
Deferred loan costs		634			1,759
Cash flow hedges		877			1,129
Other		390			501
Total deferred tax liabilities	$	28,242		$	42,624
Net deferred tax asset at year-end	$	7,293		$	9,690
Net deferred tax asset at beginning of year		9,690			14,940
(Decrease) in net deferred tax asset	$	(2,397	)	$	(5,250	)

Realization of deferred tax assets is dependent upon the generation of future taxable income or the existence of sufficient taxable income within the available carryback period. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. Based on available evidence, gross deferred tax assets will ultimately be realized and a valuation allowance was not deemed necessary at December 31, 2017 and 2016.

The following is a reconciliation of the provision for income taxes to the amount computed by applying the applicable Federal statutory rate of 35% to income before taxes:

	Years ended December 31,
(In thousands)	2017			2016			2015
Federal income tax at statutory rate	$	44,857		$	41,581		$	40,820
Tax exempt income		(2,303	)		(2,205	)		(2,037	)
Net increase in cash surrender value of life insurance		(1,780	)		(1,712	)		(1,373	)
Federal tax credit		(1,343	)		(1,323	)		(939	)
State taxes, net of federal tax benefit		4,107			3,838			3,127
Federal tax reform (Tax Act)		4,407			-			-
Stock-based compensation, excess tax benefit		(1,619	)		-			-
Other, net		(316	)		213			605
Income tax expense	$	46,010		$	40,392		$	40,203

A reconciliation of the beginning and ending balance of Federal and State gross unrecognized tax benefits ("UTBs") is as follows:

(In thousands)	2017			2016
Balance at January 1	$	559		$	-
Additions for tax positions of prior years		-			425
Reduction for tax positions of prior years		(31	)		-
Current period tax positions		137			134
Balance at December 31	$	665		$	559
Amount that would affect the effective tax rate if recognized, gross of tax	$	525		$	363

At December 31, 2015 the Company had no UTBs. We recognize interest and penalties on the income tax expense line in the accompanying consolidated statements of income. We monitor changes in tax statutes and regulations to determine if significant changes will occur over the next 12 months. As of December 31, 2017, no significant changes to UTBs are projected; however, tax audit examinations are possible. The Company recognized an insignificant amount of interest expense related to UTBs in the consolidated statement of income for the year ended December 31, 2017.

During the year ended December 31, 2017, the Company settled the tax audit by the state of New York for tax years, 2011, 2012 and 2013 without any material audit assessments. The Company is no longer subject to U.S. Federal tax examination by tax authorities for years prior to 2014 and New York State for years prior to 2013. The 2013 tax year related to New York examinations, while previously audited by the state, remains open by statute.