Entity information:
Note
1
0
: Income Taxes
The Company files United States federal income tax returns, and Virginia, West Virginia and North Carolina state income tax returns. 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.
 
Allocation of income tax expense between current and deferred portions is as follows:
 
   
Years
ended December 31,
  
   
20
17
    
20
16
    
20
15
  
Current
  
$
2,943
     $
3,934
     $
4,730
  
Deferred
expense
 
 
1,790
      
18
      
10
  
Deferred tax adjustment for enacted change in tax rate
  
 
1,560
 
    
---
      
---
  
Total income tax expense
  
$
6,293
     $
3,952
     $
4,740
  
 
Income tax expense for
2017
includes a downward adjustment of net deferred tax assets in the amount of
$1,560
 recorded as a result of the enactment of the Tax Cuts and Jobs Act on
December 22, 2017. 
The Company’s marginal tax rate prior to the enactment of the Act is
35%.
Effective
January 1, 2018,
the Company’s tax rate will be
21%.
 
The following is a reconciliation of the “expected” income tax expense, computed by applying the U.S. Federal income tax rate of
35%
to income before income tax expense, with the reported income tax expense:
 
   
Years
ended December 31,
  
   
20
17
    
20
16
    
20
15
  
Computed “expected” income tax expense
  
$
7,135
     $
6,613
     $
7,201
  
Tax impact of enacted change in tax rate
  
 
1,560
 
    
---
      
---
  
Tax-exempt interest income
  
 
(2,144
)
    
(2,234
)
    
(2,381
)
Nondeductible interest expense
  
 
89
      
92
      
101
  
Other, net
  
 
(347
 )    
(519
)
    
(181
)
Reported income tax expense
  
$
6,293
     $
3,952
     $
4,740
  
 
The components of net deferred tax assets, included in other assets, are as follows:
 
   
December
31,
  
   
20
17
    
20
16
  
Deferred tax assets:
                
Allowance for loan losses and unearned fee income
  
$
1,773
     $
3,347
  
Valuation allowance on other real estate owned
  
 
156
      
237
  
Defined benefit plan
  
 
1,592
      
2,730
  
Deferred compensation and other liabilities
  
 
863
      
1,336
  
Discount accretion of securities
  
 
---
      
15
  
Net unrealized loss on securities available for sale
  
 
984
      
1,932
  
Total deferred tax assets
  
$
5,368
     $
9,597
  
                 
Deferred tax liabilities:
                
Fixed assets
  
$
(388
)
   $
(620
)
Deposit intangibles
  
 
(1,059
)
    
(1,573
)
Defined benefit plan, prepaid portion
  
 
(1,579
)
    
(1,345
)
Discount accretion of securities
  
 
(2
)
  
 
 
 
Total deferred tax liabilities
  
 
(3,028
)
    
(3,538
)
Net deferred tax asset
s
  
$
2,340
     $
6,059
  
 
The Company has determined that a valuation allowance for the gross deferred tax assets is
not
necessary at
December 31, 2017
and
2016.