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 2015.

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



	December 31,
	2018		2017
Deferred tax assets:
Allowance for loan losses	$	2,868	$	3,047
Nonaccrual loan interest	460		444
Other real estate owned valuation allowance	69		150
Deferred compensation	832		835
Net unrealized losses on securities	1,147		226
Acquisition accounting adjustments	734		934
Accrued pension liability	36		170
Other	420		488
Total deferred tax assets	6,566		6,294

Deferred tax liabilities:
Depreciation	759		761
Accretion of discounts on securities	24		24
Core deposit intangibles	208		267
Other	238		201
Total deferred tax liabilities	1,229		1,253
Net deferred tax assets	$	5,337	$	5,041

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



	Years Ended December 31,
	2018		2017		2016
Current tax expense	$	5,090	$	7,355	$	6,125
Deferred tax expense	556		724		882
Deferred tax asset adjustment for tax rate change	—		2,747		—
Total income tax expense	$	5,646	$	10,826	$	7,007

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



	Years Ended December 31,
	2018			2017			2016
Expected federal tax expense	$	5,927		$	9,126		$	8,158
Tax impact from enacted change in tax rate	—			2,747			—
Nondeductible interest expense	69			85			94
Tax-exempt interest	(504		)	(949		)	(1,265		)
State income taxes	337			296			296
Other, net	(183		)	(479		)	(276		)
Total income tax expense	$	5,646		$	10,826		$	7,007

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 Cuts and Jobs Act on December 22, 2017 (the "Tax Reform Act"). The Tax Reform Act reduced the corporate federal tax rate from 35% to 21% effective January 1, 2018.