Note 13: Income Taxes

The provision for income taxes includes these components:

	For The Year Ended December 31,
($ in thousands)	2018		2017
Taxes currently payable	$	2,482	$	3,348
Impact of TCJA		-		(1,730	)
Deferred provision		324		942
Income tax expense	$	2,806	$	2,560

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

	For The Year Ended December 31,
($ in thousands)	2018			2017
Computed at the statutory rate (21% and 34%)	$	3,033		$	4,633
Increase (decrease) resulting from
Tax exempt interest		(118	)		(200	)
BOLI income		(75	)		(142	)
Impact of TCJA		-			(1,730	)
Stock compensation		(43	)		(77	)
Other		9			76
Actual tax expense	$	2,806		$	2,560

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

	For The Year Ended December 31,
($ in thousands)	2018			2017
Deferred tax assets
Allowance for loan losses	$	1,715		$	1,665
Net deferred loan fees		61			63
Unrealized losses on available-for-sale securities		147			38
Other		215			165
		2,138			1,931
Deferred tax liabilities
Depreciation		(950	)		(926	)
Mortgage servicing rights		(2,464	)		(2,162	)
Purchase accounting adjustments		(1,162	)		(1,102	)
Prepaids		(205	)		(169	)
FHLB stock dividends		(288	)		(288	)
		(5,069	)		(4,647	)
Net deferred tax liability	$	(2,931	)	$	(2,716	)

The United States Congress enacted significant change to the US tax code on December 22, 2017. Among other changes, the TCJA reduced the US Federal corporate tax rate from 35 percent to 21 percent effective January 1, 2018. For deferred tax assets and liabilities, amounts were remeasured based on the rates expected to reverse in the future, which was 21 percent. As noted above, the Company realized a one-time tax credit due to the TCJA of $1.7 million in 2017.