Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income tax expense (benefit) attributable to continuing operations

Income tax expense attributable to continuing operations for each of the years ended December 31 is as follows (in thousands):



	2017		2016		2015
Current tax expense :
Federal	$	63,496	$	49,769	$	41,721
State	860		—		48
Total current tax expense	64,356		49,769		41,769
Deferred tax expense:
Federal	26,339		12,776		4,963
State	1,826		1,614		857
Deferred tax revaluation expense	31,486		—		—
Total deferred tax expense	59,651		14,390		5,819
Total income tax expense	$	124,007	$	64,159	$	47,589

Income tax rate reconciliation

Pinnacle Financial's income tax expense differs from the amounts computed by applying the Federal income tax statutory rates of 35% to income (loss) before income taxes. A reconciliation of the differences for each of the years in the three-year period ended December 31, 2017 is as follows (in thousands):



	2017			2016			2015
Income tax expense at statutory rate	$	104,295		$	66,984		$	50,084
State excise tax expense, net of federal tax effect	1,746			1,049			588
Tax-exempt securities	(5,666		)	(2,510		)	(2,543		)
Federal tax credits	(434		)	(282		)	—
Bank owned life insurance	(2,778		)	(1,242		)	(892		)
Insurance premiums	(283		)	(159		)	(306		)
Revaluation of deferred tax assets and liabilities due to Tax Cuts and Jobs Act	31,486			—			—
Excess tax benefits associated with equity compensation	(5,365		)	—			—
Change in uncertain tax positions	—			—			—
Other items	1,006			319			658
Income tax expense	$	124,007		$	64,159		$	47,589

Components of deferred income taxes included in other assets

The components of deferred income taxes included in other assets in the accompanying consolidated balance sheets at December 31, 2017 and 2016 are as follows (in thousands):



	2017		2016
Deferred tax assets:
Loan loss allowance	$	16,240	$	22,308
Loans	46,567		15,534
Insurance	614		869
Accrued liability for supplemental retirement agreements	7,413		5,587
Restricted stock and stock options	8,232		8,643
Securities	—		4,275
Cash flow hedge	499		1,520
Equity method investment	635		858
Leases	1,738		1,627
Other real estate owned	2,809		149
Net federal operating loss carryforward and credits	18,085		—
Other deferred tax assets	5,373		6,413
Total deferred tax assets	108,205		67,783

Deferred tax liabilities:
Depreciation and amortization	11,504		5,823
Core deposit intangible asset	14,073		5,621
Securities	616		—
REIT dividends	3,073		4,602
FHLB related liabilities	922		285
Subordinated debt	1,077		1,001
Other deferred tax liabilities	1,171		679
Total deferred tax liabilities	32,436		18,011
Net deferred tax assets	$	75,769	$	49,772

Rollforward of uncertain tax positions

A reconciliation of the beginning and ending unrecognized tax benefit related to state uncertain tax positions is as follows (in thousands):



	2017		2016		2015
Balance at January 1,	$	1,274	$	134	$	391
Increases (decreases) due to tax positions taken during the current year	1,564		1,140		(257		)
Increases due to tax positions taken during a prior year	—		—		—
Decreases due to the lapse of the statute of limitations during the current year	—		—		—
Decreases due to settlements with the taxing authorities during the current year	—		—		—
Balance at December 31,	$	2,838	$	1,274	$	134