Income Taxes

The following table presents the components of income tax expense for the periods indicated:



	Year Ended December 31,
($ in thousands)	2018		2017		2016
Current:
Federal	$	6,322	$	9,924	$	7,856
State	3,481		3,282		2,506
Total current income tax expense	9,803		13,206		10,362
Deferred:
Federal	369		66		(61		)
Adjustment of deferred tax assets for enacted changes in tax rate	25		1,622		—
State	247		45		100
Total deferred income tax expense	641		1,733		39
Total	$	10,444	$	14,939	$	10,401

The following table presents a reconciliation of the recorded income tax expense to the amount of taxes computed by applying the applicable statutory Federal income tax rate for the periods indicated:



	Year Ended December 31,
	2018		2017		2016
Statutory federal tax rate	21.00	%	35.00	%	35.00	%
State franchise tax, net of federal tax benefit	8.48	%	6.90	%	6.94	%
Share-based compensation	0.24	%	0.49	%	0.66	%
Remeasurement from the Tax Cuts and Jobs Act	0.07	%	5.17	%	—	%
Other items, net	0.27	%	0.10	%	0.02	%
Effective income tax rate	30.06	%	47.66	%	42.62	%

On December 22, 2017, the Tax Reform Act was enacted which included a number of changes to existing U.S. tax laws, most notably a reduction of the U.S. corporate tax rate from 35% to 21%, for tax years beginning in 2018. As a result of the Tax Reform Act, the Company revalued its deferred tax assets and liabilities and recorded a reduction of its net deferred tax assets in the amount of $1.6 million in deferred income tax expense for the year ended December 31, 2017. The Tax Reform Act also places limits on certain tax deductions beginning in 2018.

Deferred taxes are a result of differences between income tax accounting and GAAP with respect to income and expense recognition. The following table presents the components of the net deferred tax asset accounts recognized in the accompanying consolidated balance sheets as of the dates indicated:



	December 31,
($ in thousands)	2018		2017
Deferred tax assets:
Allowance for loan losses	$	3,866	$	3,587
Share-based compensation	264		209
Unrealized loss on investment securities	744		574
State tax benefit	739		694
Other	529		614
Total deferred tax assets	6,142		5,678
Deferred tax liabilities:
Depreciation on premises and equipment	453		423
Loans held-for-sale market adjustment	1,653		787
Deferred loan origination costs	582		527
Other	77		94
Total deferred tax liabilities	2,765		1,831
Deferred tax assets, net	$	3,377	$	3,847

The Company did not record valuation allowances for deferred tax assets as of December 31, 2018 and 2017 due to sufficient taxable income based on multiple years of consecutive profits and projected sustainable future profits. Management concluded that the related deferred tax assets were more likely than not to be realized and a valuation allowance was not necessary as of December 31, 2018 and 2017.

At December 31, 2018 and 2017, the Company had no unrecognized tax benefits, or accrued interest or penalties. In the event the Company is assessed interest and/or penalties by federal or state tax authorities, such amounts will be classified in the consolidated financial statements as income tax expense.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in multiple state jurisdictions. The Company is no longer subject to the assessment of U.S. federal income tax for years before 2015. The statute of limitations for the assessment of California Franchise taxes has expired for tax years before 2014 (other state income and franchise tax statutes of limitations vary by state).