INCOME TAXES

The net deferred tax asset at

December 31, 2019

and

2018

represents the following temporary difference components:

	December 31,		December 31,
(In Thousands)	2019		2018
Deferred tax assets:
Unrealized holding losses on securities	$	0	$	1,145
Allowance for loan losses		2,080		2,005
Purchase accounting adjustments on loans		640		0
Other deferred tax assets		2,173		2,049
Total deferred tax assets		4,893		5,199

Deferred tax liabilities:
Unrealized holding gains on securities		934		0
Defined benefit plans - ASC 835		49		37
Bank premises and equipment		763		907
Core deposit intangibles		272		2
Other deferred tax liabilities		257		143
Total deferred tax liabilities		2,275		1,089
Deferred tax asset, net	$	2,618	$	4,110

The provision for income taxes includes the following:

(In thousands)	2019		2018
Currently payable	$	3,618	$	4,350
Tax expense resulting from allocations of certain tax benefits to equity or as a reduction in other assets		115		87
Deferred		172		(187	)
Total provision	$	3,905	$	4,250

A reconciliation of income tax at the statutory rate to the Corporation’s effective rate is as follows (amounts in thousands):

(Amounts in thousands)	2019						2018
	Amount			%			Amount			%
Statutory provision	$	4,916			21.00		$	5,515			21.00
Tax-exempt interest income		(853	)		(3.64	)		(1,046	)		(3.98	)
Increase in cash surrender value and other income from life insurance, net		(91	)		(0.39	)		(170	)		(0.65	)
ESOP Dividends		(113	)		(0.48	)		(98	)		(0.37	)
State income tax, net of Federal benefit		122			0.52			125			0.48
Other, net		(76	)		(0.32	)		(76	)		(0.29	)
Effective income tax provision	$	3,905			16.68		$	4,250			16.18

December 2017,

the Corporation recognized an adjustment in the carrying value of the net deferred tax asset as a result of a reduction in the federal corporate income tax rate to

21%,

effective

January 1, 2018,

from the

35%

marginal rate that had previously been in effect. At

December 31, 2017,

the portion of the adjustment attributable to items of accumulated other comprehensive income (loss) were stranded in retained earnings, including components related to unrealized losses on securities and defined benefit plans. As described in Note

the Corporation elected early adoption of ASU

2018

02,

resulting in a reclassification between

two

categories of stockholders’ equity at

January 1, 2018,

with an increase of

$325,000

in retained earnings and a decrease in accumulated other comprehensive loss for the same amount (

net change in stockholders’ equity).

The Corporation has

unrecognized tax benefits, nor pending examination issues related to tax positions taken in preparation of its income tax returns. With limited exceptions, the Corporation is

longer subject to examination by the Internal Revenue Service for years prior to

2016.