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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Taxes |
Income Taxes Text Block | NOTE 13: INCOME TAXES For the years ended December 31, 2017 and 2016 the components of income tax expense from continuing operations are presented below.
|  |  |  | Year ended December 31
(Dollars in thousands) | 2017 | 2016
Current income tax expense: |  |  |  |  |
| Federal | $ | 2,782 |  |  | 2,143
| State |  | 499 |  |  | 498
|  | Total current income tax expense |  | 3,281 |  |  | 2,641
Deferred income tax expense (benefit): |  |  |  |  |
| Federal |  | 384 |  |  | 464
| State |  | (28) |  |  | (3)
|  | Total deferred income tax expense |  | 356 |  |  | 461
| Total income tax expense | $ | 3,637 |  |  | 3,102
Total income tax expense differs from the amounts computed by applying the statutory federal income tax rate of 34% to earnings before income taxes. A reconciliation of the differences for the years ended December 31, 2017 and 2016, is presented below.
|  |  |  |  | 2017 |  | 2016
|  |  |  |  |  |  | Percent of |  |  |  |  | Percent of |
|  |  |  |  |  |  | pre-tax |  |  |  |  | pre-tax |
(Dollars in thousands) |  |  | Amount |  | earnings |  |  | Amount |  | earnings |
Earnings before income taxes |  | $ | 11,483 |  |  |  |  | 11,252 |  |  |
Income taxes at statutory rate |  |  | 3,904 |  | 34.0 | % |  | 3,826 |  | 34.0 | %
| Tax-exempt interest |  |  | (813) |  | (7.0) |  |  | (857) |  | (7.6) |
| State income taxes, net of |  |  |  |  |  |  |  |  |  |  |
|  | federal tax effect |  |  | 325 |  | 2.8 |  |  | 325 |  | 2.9 |
| Bank-owned life insurance |  |  | (150) |  | (1.3) |  |  | (155) |  | (1.4) |
| Federal tax reform impact |  |  | 370 |  | 3.2 |  |  | — |  | — |
| Other |  |  | 1 |  | — |  |  | (37) |  | (0.3) |
Total income tax expense |  | $ | 3,637 |  | 31.7 | % |  | 3,102 |  | 27.6 | %
The Tax Cuts and Jobs Act was signed into law on December 22, 2017. The net tax expense recognized as a result of the re measurement of deferred taxes is presented as Federal tax reform impact in the above table. The Company had net deferred tax assets of $0.8 million and $1.3 million at December 31, 2017 and 2016, respectively, included in other assets on the consolidated balance sheets. The tax effects of temporary differences that give rise to significant por tions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are presented below:
|  |  |  | December 31
(Dollars in thousands) | 2017 | 2016
Deferred tax assets: |  |  |  |  |
| Allowance for loan losses | $ | 1,195 |  |  | 1,713
| Unrealized loss on securities |  | 190 |  |  | 414
| Other |  | 216 |  |  | 316
|  | Total deferred tax assets |  | 1,601 |  |  | 2,443
Deferred tax liabilities: |  |  |  |  |
| Premises and equipment |  | 241 |  |  | 205
| Originated mortgage servicing rights |  | 413 |  |  | 721
| Other |  | 158 |  |  | 237
|  | Total deferred tax liabilities |  | 812 |  |  | 1,163
|  | Net deferred tax asset | $ | 789 |  |  | 1,280
A valuation allowance is recognized for a deferred tax asset if, based on the weight of available evidence, it is more-likely-than-not that some portion of the entire deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax pl anning strategies in making this assessment. Based upon the level of historical taxable income and projection for future taxable income over the periods which the temporary differences resulting in the remaining deferred tax assets are deductible, manageme nt believes it is more-likely-than-not that the Company will realize the benefits of these deductible differences at December 31, 2017. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income are reduced. The change in the net deferred tax asset for the years ended December 31, 2017 and 2016, is presented below.
|  |  |  |  | Year ended December 31
(Dollars in thousands) | 2017 | 2016
Net deferred tax asset: |  |  |  |  |
Balance, beginning of year | $ | 1,280 |  |  | 195
Deferred tax expense related to continuing operations |  | (356) |  |  | (461)
Stockholders' equity, for accumulated other comprehensive (income) loss |  | (135) |  |  | 1,546
Balance, end of year | $ | 789 |  |  | 1,280
ASC 740, Income Taxes, defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authority. This section also provides guidance on the de-recognition, measurement, and classifi cation of income tax uncertainties in interim periods. As of December 31, 2017, the Company had no unrecognized tax benefits related to federal or state income tax matters. The Company does not anticipate any material increase or decrease in unrecognized tax benefits during 2018 relative to any tax positions taken prior to December 31, 2017. As of December 31, 2017, the Company has accrued no interest and no penalties related to uncertain tax positions. It is the Company’s policy to recognize i nterest and penalties related to income tax matters in income tax expense. The Company and its subsidiaries file consolidated U.S. federal and State of Alabama income tax returns. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and the State of Alabama for the years ended December 31, 2014 through 2017.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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