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INCOME TAXES | 9 Months Ended
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Sep. 30, 2019
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 2015. The following table summarizes income tax expense for the three and nine months ended September 30, 2019 and 2018.
| Three months ended September 30, |  |  |  | Nine months ended September 30, |  |
(Dollars in thousands) | 2019 |  | 2018 |  | 2019 |  | 2018
Current expense | $ | 244 |  |  | $ | 406 |  |  | $ | 334 |  |  | $ | 754 |
Deferred expense | 1,096 |  |  | 238 |  |  | 1,348 |  |  | 756 |
Income tax expense | $ | 1,340 |  |  | $ | 644 |  |  | $ | 1,682 |  |  | $ | 1,510 |
Income tax expense includes $489,000 and $6,000 related to net securities gains for the three months ended September 30, 2019 and 2018, and $994,000 and $187,000 related to net security gains for the nine months ended September 30, 2019 and 2018. The following table summarizes deferred tax assets and liabilities at September 30, 2019 and December 31, 2018.
(Dollars in thousands) | September 30, 2019 |  | December 31, 2018
Deferred tax assets: |  |  |
Allowance for loan losses | $ | 3,465 |  |  | $ | 3,143 |
Deferred compensation | 396 |  |  | 723 |
Retirement and salary continuation plans | 2,326 |  |  | 1,416 |
Share-based compensation | 592 |  |  | 742 |
Off-balance sheet reserves | 270 |  |  | 219 |
Nonaccrual loan interest | 843 |  |  | 537 |
Net unrealized losses on AFS securities | 0 |  |  | 791 |
Purchase accounting adjustments | 4,349 |  |  | 1,795 |
Bonus accrual | 366 |  |  | 470 |
Low-income housing credit carryforward | 341 |  |  | 641 |
Net operating loss carryovers | 1,872 |  |  | 0 |
Other | 473 |  |  | 321 |
Total deferred tax assets | 15,293 |  |  | 10,798 |
Deferred tax liabilities: |  |  |
Depreciation | 440 |  |  | 458 |
Net unrealized gains on AFS securities | 711 |  |  | 0 |
Mortgage servicing rights | 644 |  |  | 590 |
Purchase accounting adjustments | 1,682 |  |  | 1,021 |
Other | 250 |  |  | 150 |
Total deferred tax liabilities | 3,727 |  |  | 2,219 |
Net deferred tax asset, included in Other Assets | $ | 11,566 |  |  | $ | 8,579 |
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. In the first quarter of 2019, the Company recorded a tax benefit of $185,000, related to a favorable tax law clarification concerning the treatment of life insurance assets of an acquired entity. In the second quarter of 2019, the Company recorded a tax benefit of $334,000, related to an increase in its deferred state income tax asset for the effect of the state tax rate change resulting from the Hamilton acquisition. At September 30, 2019, the Company had low-income housing credit carryforwards that expire through 2038 and acquired federal and state net operating loss carryforwards, that are subject to annual loss limitation limits, that expire through 2037.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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