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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2023
INCOME TAXES [Abstract] |
Provision for Income Taxes | The provision for income taxes consists of the following (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Currently payable |  | $ | 3,109 |  |  | $ | 6,471 |  |  | $ | 5,510 |
Deferred tax liability (asset) |  |  | 595 |  |  |  | (36 | ) |  |  | 689 |
Provision for income taxes |  | $ | 3,704 |  |  | $ | 6,435 |  |  | $ | 6,199 |
Deferred Tax Assets and Liabilities | The following temporary differences gave rise to the net deferred tax asset and liabilities at December 31, 2023 and 2022, respectively (in thousands):
|  | 2023 |  |  | 2022 |
Deferred tax assets: |  |  |  |  |  |
Allowance for credit losses |  | $ | 5,868 |  |  | $ | 4,581 |
Deferred compensation |  |  | 597 |  |  |  | 559 |
Merger & acquisition costs |  |  | - |  |  |  | 1 |
Allowance for losses on available-for-sale securities |  |  | 147 |  |  |  | 9 |
Pension and other retirement obligation |  |  | 166 |  |  |  | 146 |
Interest on non-accrual loans |  |  | 1,263 |  |  |  | 974 |
Incentive plan accruals |  |  | 662 |  |  |  | 503 |
Other real estate owned |  |  | 16 |  |  |  | 32 |
Unrealized losses on available-for-sale securities |  |  | 7,506 |  |  |  | 9,972 |
Low income housing tax credits |  |  | 44 |  |  |  | 138 |
NOL carry forward |  |  | 2,468 |  |  |  | 1,134 |
Unrealized losses on equity securities |  |  | 24 |  |  |  | - |
Non-PCD loan interest rate |  |  | 4,795 |  |  |  | - |
Right of use asset |  |  | 2,349 |  |  |  | 1,053 |
Accrued vacation |  |  | 281 |  |  |  | 157 |
Other |  |  | 428 |  |  |  | 164 |
Total |  | $ | 26,614 |  |  | $ | 19,423 |
Deferred tax liabilities: |  |  |  |  |  |
Premises and equipment |  | $ | (679 | ) |  | $ | (492 | )
Investment securities accretion |  |  | (432 | ) |  |  | (240 | )
Loan fees and costs |  |  | (859 | ) |  |  | (685 | )
Goodwill and core deposit intangibles |  |  | (2,889 | ) |  |  | (2,332 | )
Mortgage servicing rights |  |  | (201 | ) |  |  | (205 | )
Unrealized gains on equity securities |  |  | - |  |  |  | (16 | )
Unrealized gains on interest rate swap |  |  | (1,143 | ) |  |  | (1,443 | )
Borrowings fair value adjustment |  |  | (511 | ) |  |  | - |
Lease liability |  |  | (2,334 | ) |  |  | (1,047 | )
Other |  |  | (227 | ) |  |  | (77 | )
Total |  |  | (9,275 | ) |  |  | (6,537 | )
Deferred tax asset, net |  | $ | 17,339 |  |  | $ | 12,886 |
Reconciliation of Statutory Tax Rates to Effective Tax Rates | The total provision for income taxes is different from that computed at the statutory rates due to the following items (dollars in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Provision at statutory rates on pre-tax income |  | $ | 4,514 |  |  | $ | 7,450 |  |  | $ | 7,413 |
Effect of tax-exempt income |  |  | (895 | ) |  |  | (835 | ) |  |  | (764 | )
Low income housing tax credits |  |  | (585 | ) |  |  | (141 | ) |  |  | (141 | )
Low income housing expense |  |  | 399 |  |  |  | - |  |  |  | - |
Bank owned life insurance |  |  | (263 | ) |  |  | (179 | ) |  |  | (384 | )
Nondeductible interest |  |  | 251 |  |  |  | 74 |  |  |  | 44 |
Nondeductible merger and acquisition expenses |  |  | 247 |  |  |  | 61 |  |  |  | - |
Change in tax rate |  |  | - |  |  |  | - |  |  |  | - |
Other items |  |  | 36 |  |  |  | 5 |  |  |  | 31 |
Provision for income taxes |  | $ | 3,704 |  |  | $ | 6,435 |  |  | $ | 6,199 |
Statutory tax rates |  |  | 21 | % |  |  | 21 | % |  |  | 21 | %
Effective tax rates |  |  | 17.2 | % |  |  | 18.1 | % |  |  | 17.6 | %

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