Income Taxes

The Company files income tax returns with the United States of America,the Commonwealth of Virginia and West Virginia. With few exceptions, the Company is no longer subject to federal, state, or local income tax examinations for years prior to 2016.

The net deferred tax asset at December 31, 2019 and 2018 consisted of the following components:



	December 31,
	2019		2018
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	1,044	$	1,141
Deferred compensation	91		92
Accrued postretirement benefits	23		23
Home equity origination costs	52		51
Nonaccrual interest	51		41
Securities available for sale	—		424
Credit carryforward	—		216
Other	37		54
	$	1,298	$	2,042
Deferred tax liabilities:
Property and equipment	$	705	$	508
Securities available for sale	383		—
	$	1,088	$	508
Net deferred tax asset	$	210	$	1,534

The Company has not recorded a valuation allowance for deferred tax assets because management believes that it is more likely than not that they will be ultimately realized.

Income tax expense for the years ended December 31, 2019, 2018 and 2017 consisted of the following components:



	December 31,
	2019		2018			2017
	(in thousands)
Current tax expense	$	1,294	$	1,713		$	3,094
Deferred tax expense (benefit)	516		(399		)	135
Deferred tax adjustment for enacted rate change	—		—			397
	$	1,810	$	1,314		$	3,626

The following table reconciles income tax expense to the statutory federal corporate income tax amount, which was calculated by applying the federal corporate income tax rate to pre-tax income for the years ended December 31, 2019, 2018 and 2017.



	December 31,
	2019			2018			2017
	(in thousands)
Statutory federal corporate tax amount	$	2,429		$	2,166		$	3,880
Tax-exempt interest (income)	(260		)	(301		)	(417		)
Officer insurance loss (income)	15			13			(92		)
Net tax credits	(379		)	(605		)	(165		)
Corporate tax rate change	—			—			397
Other, net	5			41			23
	$	1,810		$	1,314		$	3,626

The effective tax rates were 15.65%, 12.74%, and 31.77%, for years ended December 31, 2019, 2018, and 2017, respectively. The decrease in the 2018 effective tax rate resulted from three factors. First, the corporate income tax rate was reduced from 34% to 21%, effective January 1, 2018 as a result of the Tax Cuts and Jobs Act. The effective tax rate is also impacted by tax credits on qualified affordable housing project investments as discussed in Note 25 to the Consolidated Financial Statements as well as qualified rehabilitation credits. During the third quarter of 2018, one of the Company’s rehabilitation tax credit investments was finalized and the total amount of credits to be received was determined and certified. The higher 2017 effective tax rate resulted mostly from the Tax Cuts and Jobs Act that was signed into law on December 22, 2017. The Company's deferred tax assets and liabilities were adjusted at December 31, 2017, for the reduction of our applicable corporate income tax rate from 34% to 21%, effective January 1, 2018. This adjustment resulted in a write-down of our net deferred tax assets and an increase in our federal income tax expense of $397 thousand.