Income Tax

The components of income tax expense are as follows:



	Years Ended December 31,
	2018			2017		2016
	(in thousands)
Current expense
Federal	$	33,400		$	39,708	$	41,365
State	5,446			3,016		1,704
Total current tax expense	$	38,846		$	42,724	$	43,069
Deferred tax expense (benefit)
Federal	$	(291	)	$	21,524	$	550
State	399			907		1,296
Total deferred tax expense	108			22,431		1,846
Total	$	38,954		$	65,155	$	44,915

Significant components of the Company’s deferred tax assets and liabilities are as follows:



	December 31,
	2018			2017
	(in thousands)
Deferred tax assets:
Allowance for loan and lease losses	$	20,578		$	18,315
Deferred compensation	9,501			9,539
Stock options and restricted stock	1,850			1,438
OREO	288			521
Nonaccrual interest	446			163
Unrealized loss on investment securities	10,129			5,992
Net operating losses and credit carryforwards	5,356			7,259
Other	733			985
Total deferred tax assets	48,881			44,212
Deferred tax liabilities:
Asset purchase tax basis difference	(7,229		)	(5,709		)
Federal Home Loan Bank stock dividends	(790		)	(782		)
Deferred loan fees	(4,399		)	(4,505		)
Purchase accounting	(9,245		)	(9,088		)
Depreciation	(2,609		)	(1,581		)
Other	(195		)	(2,036		)
Total deferred tax liabilities	(24,467		)	(23,701		)
Net deferred tax asset	$	24,414		$	20,511

A reconciliation of the Company’s effective income tax rate with the federal statutory tax rate is as follows:



	Years Ended December 31,
	2018					2017					2016
	Amount			Percent		Amount			Percent		Amount			Percent
	(dollars in thousands)
Income tax based on statutory rate	$	44,485		21	%	$	62,262		35	%	$	52,424		35	%
Increase (decrease) resulting from:
Tax exempt instruments	(6,423		)	(3	)%	(8,485		)	(5	)%	(7,433		)	(5	)%
Bank owned life insurance	(1,261		)	(1	)%	(3,351		)	(2	)%	(1,680		)	(1	)%
Acquisition costs	—			—	%	825			1	%	—			—	%
Deferred tax asset revaluation	—			—	%	12,210			7	%	—			—	%
State income tax, net of federal benefit	4,931			2	%	2,550			1	%	1,950			1	%
Other, net	(2,778		)	(1	)%	(856		)	—	%	(346		)	—	%
Income tax provision	$	38,954		18	%	$	65,155		37	%	$	44,915		30	%

As of December 31, 2018 and 2017, we had no unrecognized tax benefits. Our policy is to recognize interest and penalties on unrecognized tax benefits in “Provision for income taxes” in the Consolidated Statements of Income. There were no amounts related to interest and penalties recognized for the years ended December 31, 2018 and 2017. As a result of recent acquisitions, the Company has net operating loss carryforwards in the federal, Idaho and Oregon jurisdictions of $20.2 million, $18.7 million and $132 thousand, respectively, which begin to expire in 2024, and no federal credit carryforwards.

The Tax Cuts and Jobs Act was signed into law on December 22, 2017. The law included significant changes to the U.S. corporate tax system, including a Federal corporate rate reduction from 35% to 21%. In 2017, the Company applied the newly enacted corporate federal income tax rate of 21% resulting in a $12.2 million increase in tax expense from the re-measurement of its net deferred tax assets.