12. Income Taxes

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

	Years ended December 31,
(In thousands)	2018		2017			2016
Current
Federal	$	15,762	$	35,839		$	30,492
State		5,977		6,599			5,628
Total Current	$	21,739	$	42,438		$	36,120

Deferred
Federal	$	2,281	$	3,850		$	3,994
State		416		(278	)		278
Total Deferred	$	2,697	$	3,572		$	4,272
Total income tax expense	$	24,436	$	46,010		$	40,392

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% and establishing other tax laws affecting 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 one year remeasurement period allowed under SAB 118 ended December 31, 2018 and the Company did not make any significant changes to the provisional amounts recorded.

In connection with the 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. During 2018, the Company recorded a $5.5 million benefit primarily related to changes in accounting methods approved by the Internal Revenue Services in the fourth quarter of 2018.

In the first quarter of 2017, the Company adopted the provision of FASB 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 $0.5 million and $1.8 million in the years ended December 31, 2018 and 2017, respectively.

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)	2018		2017
Deferred tax assets:
Allowance for loan losses	$	18,042	$	17,390
Deferred compensation		7,340		7,230
Postretirement benefit obligation		1,962		2,159
Fair value adjustments from acquisitions		663		919
Unrealized losses on securities		4,893		3,715
Accrued liabilities		913		769
Stock-based compensation expense		2,821		2,642
Other		1,008		711
Total deferred tax assets	$	37,642	$	35,535
Deferred tax liabilities:
Pension benefits	$	10,782	$	12,439
Amortization of intangible assets		11,525		11,110
Premises and equipment, primarily due to accelerated depreciation		4,973		2,792
Other		1,567		1,901
Total deferred tax liabilities	$	28,847	$	28,242
Net deferred tax asset at year-end	$	8,795	$	7,293
Net deferred tax asset at beginning of year		7,293		9,690
Increase (decrease) in net deferred tax asset	$	1,502	$	(2,397	)

Realization of deferred tax assets is dependent upon the generation of future taxable income. A valuation allowance is recorded 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, 2018 and 2017.

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

	Years ended December 31
(In thousands)	2018			2017			2016
Federal income tax at statutory rate	$	28,770		$	44,857		$	41,581
Tax exempt income		(1,456	)		(2,303	)		(2,205	)
Net increase in cash surrender value of life insurance		(973	)		(1,780	)		(1,712	)
Federal tax credit		(1,499	)		(1,343	)		(1,323	)
State taxes, net of federal tax benefit		5,051			4,107			3,838
Federal tax reform (Tax Act)		-			4,407			-
Accounting method changes - tax rate change impact		(5,326	)		-			-
Stock-based compensation, excess tax benefit		(456	)		(1,619	)		-
Other, net		325			(316	)		213
Income tax expense	$	24,436		$	46,010		$	40,392

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

(In thousands)	2018			2017
Balance at January 1	$	665		$	559
Additions for tax positions of prior years		27			-
Reduction for tax positions of prior years		(159	)		(31	)
Current period tax positions		108			137
Balance at December 31	$	641		$	665
Amount that would affect the effective tax rate if recognized, gross of tax	$	506		$	525

The Company recognizes interest and penalties on the income tax expense line in the accompanying consolidated statements of income. The Company monitors changes in tax statutes and regulations to determine if significant changes will occur over the next 12 months. As of December 31, 2018, 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, 2018.

During the year ended December 31, 2018, the Company recognized an insignificant benefit related to the resolution of state income tax positions. The Company is no longer subject to U.S. Federal tax examination by tax authorities for years prior to 2015 and New York State for years prior to 2014. The 2014, 2015 and 2016 tax years are currently being audited by New York State.