Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

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):



	2018		2017		2016
Current tax expense :
Federal	$	73,921	$	63,496	$	49,769
State	4,822		860		—
Total current tax expense	78,743		64,356		49,769
Deferred tax expense:
Federal	10,162		26,339		12,776
State	1,603		1,826		1,614
Deferred tax revaluation expense	—		31,486		—
Total deferred tax expense	11,765		59,651		14,390
Total income tax expense	$	90,508	$	124,007	$	64,159

Income tax rate reconciliation

Pinnacle Financial's income tax expense differs from the amounts computed by applying the Federal income tax statutory rates of 21% to income before income taxes for 2018 and 35% for 2017 and 2016. A reconciliation of the differences for each of the years in the three-year period ended December 31, 2018 is as follows (in thousands):



	2018			2017			2016
Income tax expense at statutory rate	$	94,489		$	104,295		$	66,984
State excise tax expense, net of federal tax effect	5,076			1,746			1,049
Tax-exempt securities	(7,222		)	(5,666		)	(2,510		)
Federal tax credits	(845		)	(434		)	(282		)
Bank owned life insurance	(2,764		)	(2,778		)	(1,242		)
Insurance premiums	(112		)	(283		)	(159		)
Revaluation of deferred tax assets and liabilities due to Tax Cuts and Jobs Act	—			31,486			—
Excess tax benefits associated with equity compensation	(2,966		)	(5,365		)	—
Change in uncertain tax positions	—			—			—
Other items	4,852			1,006			319
Income tax expense	$	90,508		$	124,007		$	64,159

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, 2018 and 2017 are as follows (in thousands):



	2018		2017
Deferred tax assets:
Loan loss allowance	$	20,449	$	16,240
Loans	29,453		46,567
Insurance	1,955		614
Accrued liability for supplemental retirement agreements	6,231		7,413
Restricted stock and stock options	9,026		8,232
Securities	15,974		—
Cash flow hedge	459		499
Equity method investment	602		635
Leases	1,460		1,738
Other real estate owned	1,158		2,809
Net federal operating loss carryforward and credits	13,754		18,085
Annual incentive compensation	9,996		2,922
Other deferred tax assets	2,503		2,451
Total deferred tax assets	113,020		108,205

Deferred tax liabilities:
Depreciation and amortization	11,769		11,504
Core deposit intangible asset	11,408		14,073
Securities	—		616
REIT dividends	1,589		3,073
FHLB related liabilities	925		922
Subordinated debt	1,134		1,077
Other deferred tax liabilities	1,444		1,171
Total deferred tax liabilities	28,269		32,436
Net deferred tax assets	$	84,751	$	75,769

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):



	2018		2017		2016
Balance at January 1,	$	2,838	$	1,274	$	134
Increases due to tax positions taken during the current year	2,245		1,564		1,140
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,	$	5,083	$	2,838	$	1,274