Income Taxes

The components of federal and state income tax expense for the years ended December 31, 2018, 2017 and 2016 were as follows (in thousands):



	2018		2017		2016
Current
Federal	$	4,841	$	9,825	$	11,375
State	2,781		2,719		2,953
Total Current	7,622		12,544		14,328
Deferred
Federal	2,818		2,047		(1,940		)
State	1,465		451		(448		)
Total Deferred	4,283		2,498		(2,388		)
Total	$	11,905	$	15,042	$	11,940

Recorded income tax expense differs from the expected tax expense (computed by applying the applicable statutory U.S. federal tax rate of 21% for 2018 and 35% for 2017 and 2016 to income before income taxes). During 2018, 2017 and 2016, the Company was in a graduated tax rate position. The principal reasons for the difference are as follows (in thousands):



	2018			2017			2016
Expected income taxes	$	10,186		$	14,604		$	11,823
Effects of:
Tax-exempt income from bank owned life insurance	(283		)	(573		)	(235		)
Other tax exempt income	(1,598		)	(2,223		)	(1,577		)
Nondeductible interest expense	43			28			21
State taxes, net of federal taxes	3,354			2,062			1,628
Other items	218			(266		)	280
Adjustment of deferred tax assets and liabilities for enacted change in tax laws	—			1,410			—
Effect of marginal tax rate	(15		)	—			—
Total	$	11,905		$	15,042		$	11,940

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 2018, 2017 and 2016 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 2015.

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, 2018 and 2017 are presented below (in thousands):



	2018		2017
Deferred tax assets:
Allowance for loan losses	$	7,251	$	5,694
Available-for-sale investment securities	2,644		941
Deferred compensation	3,593		749
Supplemental retirement	152		170
Core deposit premium and other intangible assets	657		664
Pass thru activities	—		126
Other-than-temporary impairment on securities	—		317
Stock compensation expense	43		—
Purchase accounting	—		475
Acquisition costs	190		210
Other	977		596
Total gross deferred tax assets	15,507		9,942
Deferred tax liabilities:
Deferred loan costs	126		26
Intangibles amortization	4,135		3,685
Prepaid expenses	297		232
FHLB stock dividend	232		158
Depreciation	2,149		1,207
Deferred revenue	81		58
Purchase accounting	6,066		—
Accumulated accretion	199		112
Mortgage servicing rights	578		240
Total gross deferred tax liabilities	13,863		5,718
Net deferred tax assets	$	1,644	$	4,224

Net deferred tax assets are recorded in other assets on the consolidated balance sheets. No valuation allowance related to deferred tax assets was recorded at December 31, 2018 and 2017 as management believes it is more likely than not that the deferred tax assets will be fully realized.