Note 13: Income Taxes

The provision for income taxes includes these components:

($ in thousands)	For The Year Ended December 31,
	2017			2016		2015
Taxes currently payable	$	3,348		$	3,379	$	1,885
Impact of TCJA		(1,730	)		-		-
Deferred provision		942			738		1,519
Income tax expense	$	2,560		$	4,117	$	3,404

A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense is shown below:

($ in thousands)	For The Year Ended December 31,
	2017			2016			2015
Computed at the statutory rate (34%)	$	4,633		$	4,387		$	3,748
Increase (decrease) resulting from
Tax exempt interest		(200	)		(218	)		(240	)
BOLI income		(142	)		(98	)		(99	)
Impact of TCJA		(1,730	)		-			-
Stock Compensation		(77	)		-			-
Other		76			46			(5	)
Actual tax expense	$	2,560		$	4,117		$	3,404

The tax effects of temporary differences related to deferred taxes shown on the balance sheets are:

($ in thousands)	At December 31,
	2017			2016			2015
Deferred tax assets
Allowance for loan losses	$	1,665		$	2,627		$	2,377
Net deferred loan fees		63			98			104
Unrealized losses on available-for-sale securities		38			-			-
Other		165			361			757
		1,931			3,086			3,238
Deferred tax liabilities
Depreciation		(926	)		(1,385	)		(1,335	)
Mortgage servicing rights		(2,162	)		(2,930	)		(2,468	)
Unrealized gains on available-for-sale securities		-			(26	)		(335	)
Purchase accounting adjustments		(1,102	)		(1,659	)		(1,489	)
Prepaids		(169	)		(188	)		(285	)
FHLB stock dividends		(288	)		(466	)		(465	)
		(4,647	)		(6,654	)		(6,377	)
Net deferred tax liability	$	(2,716	)	$	(3,568	)	$	(3,139	)

The United States Congress enacted significant change to the US tax code on December 22, 2017. Among other changes, the TCJA reduces the US Federal corporate tax rate from 35 percent to 21 percent. At December 31, 2017, the Company has substantially completed its accounting for the tax effects of enactment of the TCJA. For deferred tax assets and liabilities, amounts were remeasured based on the rates expected to reverse in the future, which is now 21 percent. As noted above, the Company realized a one-time tax credit due to the TCJA of $1.7 million in 2017.

The Company continues to analyze certain aspects of the TCJA and further refinements are possible, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts, although we do not expect these adjustments to materially impact our financial statements.