Income Taxes

The Company is subject to U.S. federal and Virginia income tax as well as bank franchise tax in the state of Virginia. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2015.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law, which reduced the Company's corporate tax rate from 34% to 21%. When changes in tax rates and laws are enacted, the Company must recognize the effects of changes in tax rates on deferred tax balances in the period in which the enactment occurs. Accordingly, the Company recorded a $752 thousand charge to income tax expense in 2017 related to the re-measurement of net deferred tax assets resulting from the new 21% corporate tax rate.

Net deferred tax assets consisted of the following components at December 31, 2018 and 2017 (in thousands):



	2018		2017
Deferred Tax Assets
Allowance for loan losses	$	1,052	$	1,118
Securities available for sale	481		281
Accrued health insurance	—		11
Core deposit intangible	371		317
Unvested stock-based compensation	14		9
Limited partnership investments	14		5
Loan origination fees, net	58		63
	$	1,990	$	1,804
Deferred Tax Liabilities
Depreciation	$	682	$	562
Discount accretion	1		—
Overfunded pension liability	—		27
	$	683	$	589
Net deferred tax assets	$	1,307	$	1,215

The income tax expense for the years ended December 31, 2018 and 2017 consisted of the following (in thousands):



	2018		2017
Current tax expense	$	2,152	$	2,443
Deferred tax expense ⁽¹⁾	135		1,283
	$	2,287	$	3,726


(1)	The deferred tax expense for the year ended December 31, 2017 includes $752 thousand of income taxes related to the re-measurement of net deferred tax assets.

The income tax expense differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the years ended December 31, 2018 and 2017, due to the following (in thousands):



	2018			2017
Computed tax expense at statutory federal rate ⁽²⁾	$	2,609		$	3,459
Increase in income taxes resulting from:
Re-measurement of net deferred tax assets	—			752
Other	12			—
Decrease in income taxes resulting from:
Tax-exempt interest and dividend income	(158		)	(241		)
Income from bank owned life insurance	(176		)	(244		)
	$	2,287		$	3,726


(2)	The Company's U.S. federal income tax rate was 21% for 2018 and 34% for 2017.