NOTE 16 - INCOME TAXES

The provision for income taxes (credit) consists of the following:

		2016			2015			2014
Current expense	$	8,642		$	3,046		$	2,369
Deferred expense (benefit)		(1,157	)		(547	)		263
TOTALS	$	7,485		$	2,499		$	2,632

Effective tax rates differ from federal statutory rate of 35% applied to income before income taxes due to the following:

	2016			2015			2014
Statutory tax	$	9,815		$	3,694		$	4,059
Effect of nontaxable interest		(1,684	)		(1,403	)		(1,179	)
Bank owned life insurance, net		(283	)		(242	)		(159	)
Tax credits		(367	)		(236	)		(149	)
Effect of nontaxable insurance premiums		(143	)		0			0
Nondeductible acquisition costs		40			401			0
Other		107			285			60
ACTUAL TAX	$	7,485		$	2,499		$	2,632

Deferred tax assets (liabilities) are comprised of the following:

		2016			2015
Deferred tax assets:
Allowance for credit losses	$	3,621		$	2,968
Net unrealized loss on securities available for sale		1,522			326
Deferred and accrued compensation		1,922			1,562
Deferred loan fees and costs		729			605
Post-retirement benefits		25			172
Nonaccrual loan interest income		306			324
Other-than-temporary impairment		196			196
Restricted stock		509			0
AMT credit carryforward		205			0
Other		106			142
Gross deferred tax assets	$	9,141		$	6,295

Deferred tax liabilities:
Depreciation and amortization	$	(740	)	$	(649	)
Federal Home Loan Bank dividends		(1,093	)		(1,093	)
Purchase accounting adjustments		(1,559	)		(984	)
Mortgage servicing rights		(299	)		(158	)
Prepaid expenses		(271	)		(49	)
Other		(15	)		(11	)
Gross deferred tax liabilities		(3,977	)		(2,944	)
NET DEFERRED TAX ASSET	$	5,164		$	3,351

No valuation allowance for deferred tax assets was recorded at December 31, 2016 and 2015.

At December 31, 2016 and December 31, 2015, the Company had no unrecognized tax benefits recorded. The Company does not expect the amount of unrecognized tax benefits to significantly change within the next twelve months.

The Company has approximately $205 thousand of alternative minimum tax credits that may be carried forward indefinitely.

The Company paid no penalties for the year ended December 31, 2016 or 2015. There were no amounts accrued for penalties or interest as of December 31, 2016 or 2015.

The Company is subject to U.S. federal income tax. The Company is no longer subject to examination by the federal taxing authority for years prior to 2013. The tax years 2013—2015 remain open to examination by the U.S. taxing authority.