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 2014.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law, which reduces 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, 2017 and 2016 (in thousands):



	2017		2016
Deferred Tax Assets
Allowance for loan losses	$	1,118	$	1,809
Securities available for sale	281		447
Accrued pension	—		689
Accrued health insurance	11		—
Core deposit intangible	317		371
Unvested stock-based compensation	9		19
Limited partnership investments	5		17
Loan origination fees, net	63		48
	$	1,804	$	3,400
Deferred Tax Liabilities
Depreciation	$	562	$	708
Discount accretion	—		2
Overfunded pension liability	27		—
	$	589	$	710
Net deferred tax assets	$	1,215	$	2,690

The income tax expense for the years ended December 31, 2017 and 2016 consisted of the following (in thousands):



	2017		2016
Current tax expense	$	2,443	$	1,925
Deferred tax expense (1)	1,283		428
	$	3,726	$	2,353


(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, 2017 and 2016, due to the following (in thousands):



	2017			2016
Computed tax expense at statutory federal rate	$	3,459		$	2,808
Increase in income taxes resulting from re-measurement of net deferred tax assets	752			—
Decrease in income taxes resulting from:
Tax-exempt interest and dividend income	(241		)	(254		)
Income from bank owned life insurance	(244		)	(179		)
Other	—			(22		)
	$	3,726		$	2,353