Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction and the states of Virginia and North Carolina. 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.

The components of the Company's net deferred tax assets (liabilities) were as follows (dollars in thousands):



	December 31,
	2017		2016
Deferred tax assets:
Allowance for loan losses	$	3,047	$	4,480
Nonaccrual loan interest	444		610
Other real estate owned valuation allowance	150		199
Deferred compensation	835		1,335
Net unrealized losses on securities	226		81
Acquisition accounting adjustments	1,283		3,215
Accrued pension liability	170		100
Other	488		796
Total deferred tax assets	6,643		10,816

Deferred tax liabilities:
Depreciation	761		1,030
Accretion of discounts on securities	24		113
Core deposit intangibles	267		602
Trust preferred fair value adjustment	349		581
Other	201		243
Total deferred tax liabilities	1,602		2,569
Net deferred tax assets	$	5,041	$	8,247

The provision for income taxes consists of the following (dollars in thousands):



	Years Ended December 31,
	2017		2016		2015
Current tax expense	$	7,355	$	6,125	$	4,279
Deferred tax expense	724		882		1,741
Deferred tax asset adjustment for tax rate change	2,747		—		—
Total income tax expense	$	10,826	$	7,007	$	6,020

A reconcilement of the "expected" Federal income tax expense to reported income tax expense is as follows (dollars in thousands):



	Years Ended December 31,
	2017			2016			2015
Expected federal tax expense	$	9,126		$	8,158		$	7,371
Tax impact from enacted change in tax rate	2,747			—			—
Nondeductible interest expense	85			94			78
Tax-exempt interest	(949		)	(1,265		)	(1,338		)
State income taxes	296			296			222
Other, net	(479		)	(276		)	(313		)
Total income tax expense	$	10,826		$	7,007		$	6,020

Income tax expense for 2017 includes a downward adjustment of net deferred tax assets in the amount of $2,747,000, recorded as a result of the enactment of the Tax Reform Act on December 22, 2017. The Tax Reform Act reduced the corporate federal tax rate from 35% to 21% effective January 1, 2018.