Income Taxes

The current and deferred components of income tax expense on the consolidated statements of income were as follows:



	For The Year Ended December 31,
	2018			2017			2016
Current:
Federal	$	14,102		$	14,529		$	17,854
State	1,206			1,289			930
	15,308			15,818			18,784
Deferred:
Change in federal corporate income tax rate⁽¹⁾	—			14,263			—
Federal	(2,541		)	4,117			(1,258		)
State	(61		)	(320		)	(54		)
	(2,602		)	18,060			(1,312		)
Income tax expense	$	12,706		$	33,878		$	17,472

The income tax expense differs from the amount computed by applying the statutory federal income tax rate as a result of the following:



	For The Year Ended December 31,
	2018			2017			2016
Computed tax expense⁽¹⁾	$	13,813		$	21,824		$	20,139
Increase (reduction) in income taxes resulting from:
Change in federal corporate income tax rate⁽¹⁾	—			14,263			—
State taxes, net of federal benefit	905			630			565
Tax exempt income	(741		)	(1,291		)	(1,312		)
Income from life insurance	(510		)	(829		)	(908		)
Low income housing credits	(465		)	(366		)	(376		)
Share-based awards	(150		)	(390		)	(701		)
Other	(146		)	37			65
Income tax expense	$	12,706		$	33,878		$	17,472
Income before income taxes	$	65,777		$	62,354		$	57,539
Effective tax rate	19.3		%	54.3		%	30.4		%


(1)	On December 22, 2017, the Tax Act was enacted, reducing the U.S. federal corporate income tax rate from 35.0% to 21.0%. The Company recognized the effect of the tax law changes in the period of enactment, which resulted in a reduction to net deferred tax assets and a corresponding charge to income tax expense of $14.3 million.

Temporary differences between the financial statements carrying amounts and the tax bases of assets and liabilities gave rise to the following deferred tax assets and liabilities:



	December 31,
	2018					2017
	Asset		Liability			Asset		Liability
Net operating loss and tax credit carryforward	$	11,250	$	—		$	12,078	$	—
Allowance for loan losses	5,318		—			5,201		—
Net unrealized losses on AFS securities	4,882		—			2,821		—
Pension and other benefits	3,881		—			4,455		—
Net unrealized losses on derivative instruments	1,215		—			1,623		—
Deferred compensation and benefits	927		—			1,199		—
Depreciation	—		(2,913		)	—		(2,857		)
Deferred loan origination fees	—		(1,860		)	—		(1,510		)
Other	353		—			—		(234		)
	27,826		(4,773		)	27,377		(4,601		)
Valuation allowance on deferred tax assets			—					—
Net deferred tax assets			$	23,053				$	22,776

At December 31, 2018 and 2017, the Company had $52.1 million and $56.0 million, respectively, in unused federal net operating losses that were acquired in 2015. Due to Internal Revenue Code Section 382(g) limitations, the Company's use of the federal net operating losses acquired is limited to $3.9 million annually, which was determined using the applicable federal rate and the fair value of consideration paid for the acquisition at the acquisition date. The acquired federal net operating losses will expire between 2030 and 2034. The Company expects that it will be able to fully utilize the acquired allowable federal net operating losses prior to expiration, as the Company has a history of generating taxable income well in excess of the limitation.

The Company continuously monitors and assesses the need for a valuation allowance on its deferred tax assets and, at December 31, 2018 and 2017 determined that no valuation allowance was necessary.

As of December 31, 2018, the Company's federal and state income tax returns for the year ended December 31, 2017, 2016 and 2015 were open to audit by federal and state authorities.