Federal Income Taxes

12 Months Ended

Dec. 31, 2020

Components of the consolidated provision for federal income taxes are summarized as follows for the years ended December 31:


	2020		2019		2018
Currently payable	$	1,263	$	972	$	1,088
Deferred expense (benefit)	(276)		408		275
Income tax expense	$	987	$	1,380	$	1,363

The reconciliation of the provision for federal income taxes and the amount computed at the federal statutory tax rate of income before federal income tax expense is as follows for the year ended December 31:


	2020		2019		2018
Income taxes at statutory rate	$	2,493	$	3,025	$	3,231
Effect of nontaxable income
Interest income on tax exempt municipal securities	(802)		(990)		(1,106)
Earnings on corporate owned life insurance policies	(346)		(160)		(148)
Other	288		283		231
Total effect of nontaxable income	(860)		(867)		(1,023)
Effect of nondeductible expenses	68		108		113
Effect of tax credits	(830)		(984)		(958)
Unrecognized deferred tax benefit on joint venture investment	116		98		—
Federal income tax expense	$	987	$	1,380	$	1,363

The losses recognized during 2019 and 2020 related to our joint venture investment in CSS are unlikely to reverse in the foreseeable future. As such, we did not record a deferred tax asset as of December 31, 2020 related to our investment in CSS.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for federal income tax purposes. Significant components of our deferred tax assets and liabilities, measured at the 21% statutory rate, included in other assets and other liabilities on our consolidated balance sheets, are summarized as follows as of December 31:


	2020		2019
Deferred tax assets
Allowance for loan losses	$	1,724	$	1,255
Deferred compensation	1,475		1,615
Employee benefit plans	59		77
Core deposit premium and acquisition expenses	751		742
Net unrecognized actuarial losses on pension plan	729		717
Net unrealized gains on derivative instruments	11		—
Life insurance death benefit payable	497		497
Other	890		771
Total deferred tax assets	6,136		5,674
Deferred tax liabilities
Prepaid pension cost	290		327
Premises and equipment	2,196		1,859
Accretion on securities	36		37
Core deposit premium and acquisition expenses	910		872
Net unrealized gains on available-for-sale securities	2,777		1,247
Net unrealized gains on derivative instruments	—		14
Other	956		1,157
Total deferred tax liabilities	7,165		5,513
Net deferred tax assets (liabilities)	$	(1,029)	$	161

While we are subject to U.S. federal income tax, we are no longer subject to examination by taxing authorities for years before 2017. There are no material uncertain tax positions requiring recognition in our consolidated financial statements. We do not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months.

We recognize interest and/or penalties related to income tax matters in income tax expense. We do not have any amounts accrued for interest and penalties at December 31, 2020 and 2019 and we are not aware of any claims for such amounts by federal income tax authorities.