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8. Income Taxes
 12 Months Ended
Dec. 31, 2016
Income Tax Disclosure [Abstract]  
Income Taxes

The provision for income taxes is summarized as follows:

(Dollars in thousands)                
    2016     2015     2014
Current expense   $ 1,464       2,427       1,759
Deferred income tax expense     1,097       673       178
Total income tax   $ 2,561       3,100       1,937

 

The differences between the provision for income taxes and the amount computed by applying the statutory federal income tax rate to earnings before income taxes are as follows:

(Dollars in thousands)                  
    2016     2015     2014  
Tax expense at statutory rate (34%)   $ 3,991       4,329       3,851  
State income tax, net of federal income tax effect     339       494       (283 )
Tax-exempt interest income     (1,681 )     (1,682 )     (1,630 )
Increase in cash surrender value of life insurance     (138 )     (143 )     (143 )
Nondeductible interest and other expense     78       103       119  
Other     (28 )     (1 )     23  
Total   $ 2,561       3,100       1,937  

 

The following summarizes the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities.  The net deferred tax asset is included as a component of other assets at December 31, 2016 and 2015.

(Dollars in thousands)          
    2016     2015
Deferred tax assets:          
Allowance for loan losses   $ 2,717       3,513
Accrued retirement expense     1,616       1,574
Other real estate     -       33
Federal credit carryforward     326       -
State credit carryforward     14       -
Restricted stock     745       417
Accrued bonuses     216       238
Interest income on nonaccrual loans     27       88
Other than temporary impairment     14       374
Other     23       16
Total gross deferred tax assets     5,698       6,253
               
Deferred tax liabilities:              
Deferred loan fees     797       588
Accumulated depreciation     532       172
Prepaid expenses     78       59
Other     23       70
Unrealized gain on available for sale securities     1,807       3,308
Total gross deferred tax liabilities     3,237       4,197
               
Net deferred tax asset   $ 2,461       2,056

 

The Company has analyzed the tax positions taken or expected to be taken in its tax returns and has concluded that it has no liability related to uncertain tax positions.

The Company's tax filings for years 2013 through 2016 were at year end 2016 open to audit under statutes of limitations by the Internal Revenue Service and State taxing authorities.