Income Taxes

The components of federal and state income tax expense for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands):



	2019		2018		2017
Current
Federal	$	8,538	$	4,841	$	9,825
State	4,900		2,781		2,719
Total Current	13,438		7,622		12,544
Deferred
Federal	1,368		2,818		2,047
State	517		1,465		451
Total Deferred	1,885		4,283		2,498
Total	$	15,323	$	11,905	$	15,042

Recorded income tax expense differs from the expected tax expense (computed by applying the applicable statutory U.S. federal tax rate of 21% for 2019 and 2018 and 35% for 2017 to income before income taxes). During 2019, 2018 and 2017, the Company was in a graduated tax rate position. The principal reasons for the difference are as follows (in thousands):



	2019			2018			2017
Expected income taxes	$	13,286		$	10,186		$	14,604
Effects of:
Tax-exempt income from bank owned life insurance	(563		)	(283		)	(573		)
Other tax exempt income	(1,701		)	(1,598		)	(2,223		)
Nondeductible interest expense	70			43			28
State taxes, net of federal taxes	4,280			3,354			2,062
Other items	116			218			(266		)
Adjustment of deferred tax assets and liabilities for enacted change in tax laws	—			—			1,410
Effect of marginal tax rate	(165		)	(15		)	—
Total	$	15,323		$	11,905		$	15,042

On December 22, 2017, the United States enacted certain tax reforms through the Tax Cuts and Jobs Act, which changes existing tax laws, most significantly a change in the statutory corporate tax rate from 35% to 21%. As a result of this enactment, the Company incurred additional one-time income tax expense of approximately $1.4 million during the fourth quarter of 2017, primarily due to re-measurement of deferred tax assets and liabilities.

Tax expense recorded by the Company during 2019, 2018 and 2017 did not include any interest or penalties. Tax returns filed with the Internal Revenue Service and Illinois Department of Revenue are subject to review by law under a three-year statute of limitations. The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2016.

The tax effects of the temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2019 and 2018 are presented below (in thousands):



	2019			2018
Deferred tax assets:
Allowance for loan losses	$	7,512		$	7,251
Available-for-sale investment securities	—			2,644
Deferred compensation	3,487			3,593
Supplemental retirement	133			152
Core deposit premium and other intangible assets	889			657
Stock compensation expense	54			43
Deferred revenue	521			—
Acquisition costs	265			190
Other	749			977
Total gross deferred tax assets	13,610			15,507
Deferred tax liabilities:
Deferred loan costs	13			126
Intangibles amortization	4,584			4,135
Prepaid expenses	754			297
FHLB stock dividend	23			232
Depreciation	2,500			2,149
Deferred revenue	—			81
Purchase accounting	7,906			6,066
Accumulated accretion	304			199
Mortgage servicing rights	411			578
Available-for-sale investment securities	3,415			—
Total gross deferred tax liabilities	19,910			13,863
Net deferred tax assets (liabilities)	$	(6,300	)	$	1,644

Net deferred tax assets are recorded in other assets on the consolidated balance sheets, while net deferred tax liabilities are recorded in other liabilities. No valuation allowance related to deferred tax assets was recorded at December 31, 2019 and 2018 as management believes it is more likely than not that the deferred tax assets will be fully realized.