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INCOME TAXES | 6 Months Ended
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Jun. 30, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The Company files income tax returns in the U.S. federal jurisdiction, the Commonwealth of Pennsylvania and the State of Maryland. The Company is no longer subject to tax examination by tax authorities for years before 2013. The following table summarizes income tax expense for the three and six months ended June 30, 2017 and 2016.
| Three months ended June 30, |  | Six months ended June 30,
(Dollars in thousands) | 2017 |  | 2016 |  | 2017 |  | 2016
Current year expense (benefit): |  |  |  |  |  |  |
Federal | $ | 145 |  |  | $ | 238 |  |  | $ | 202 |  |  | $ | 126 |
State | (9 | ) |  | (1 | ) |  | (7 | ) |  | (3 | )
| 136 |  |  | 237 |  |  | 195 |  |  | 123 |
Deferred expense: |  |  |  |  |  |  |
Federal | 371 |  |  | 10 |  |  | 735 |  |  | 732 |
State | 9 |  |  | 5 |  |  | 10 |  |  | 11 |
| 380 |  |  | 15 |  |  | 745 |  |  | 743 |
Income tax expense | $ | 516 |  |  | $ | 252 |  |  | $ | 940 |  |  | $ | 866 |
The provision for income taxes includes $222,000 and $0 of applicable income tax expense related to net securities gains for the three months ended June 30, 2017 and 2016, and $223,000 and $497,000 of applicable income tax expense related to net securities gains for the six months ended June 30, 2017 and 2016. The base federal statutory rate used in determining the estimated annual effective tax rate for the quarter ended June 30, 2017 was 34%. The estimated annual effective tax rate used to determine tax expense in the quarter ended June 30, 2016 was based on a federal statutory rate of 35%. In the third quarter of 2016, the Company reassessed its estimated annual effective tax rate and changed the base federal statutory rate to 34% in expectation that the Company would not be in the higher tax bracket. The following table presents the components of the net deferred tax asset, included in other assets on the consolidated balance sheets.
(Dollars in thousands) | June 30, 2017 |  | December 31, 2016
Deferred tax assets: |  |  |
Allowance for loan losses | $ | 4,719 |  |  | $ | 4,725 |
Deferred compensation | 548 |  |  | 545 |
Retirement plans and salary continuation | 2,018 |  |  | 1,942 |
Share-based compensation | 730 |  |  | 583 |
Off-balance sheet reserves | 337 |  |  | 313 |
Nonaccrual loan interest | 466 |  |  | 370 |
Net unrealized losses on securities available for sale | 0 |  |  | 600 |
Goodwill | 77 |  |  | 92 |
Bonus accrual | 321 |  |  | 236 |
Low-income housing credit carryforward | 2,148 |  |  | 1,983 |
Alternative minimum tax credit carryforward | 4,348 |  |  | 4,048 |
Net operating loss carryforward | 804 |  |  | 2,520 |
Other | 523 |  |  | 479 |
Total deferred tax assets | 17,039 |  |  | 18,436 |
Deferred tax liabilities: |  |  |
Depreciation | 694 |  |  | 771 |
Net unrealized gains on securities available for sale | 1,472 |  |  | 0 |
Mortgage servicing rights | 814 |  |  | 777 |
Purchase accounting adjustments | 420 |  |  | 435 |
Other | 198 |  |  | 195 |
Total deferred tax liabilities | 3,598 |  |  | 2,178 |
Net deferred tax asset | $ | 13,441 |  |  | $ | 16,258 |
The provision for income taxes differs from that computed by applying statutory rates to income before income taxes primarily due to the effects of tax-exempt income, non-deductible expenses and tax credits. At June 30, 2017, the Company had low-income housing and net operating loss carryforwards that expire through 2036 and 2032, respectively.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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