INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2016

INCOME TAXES

Schedule of income tax expense

Income tax expense was as follows (in thousands):

	2016		2015		2014
Current	$	1,082	$	629	$	853
Deferred		(309)		(99)		44
	$	773	$	530	$	897

Schedule of year-end deferred tax assets and liabilities

Year-end deferred tax assets and liabilities were due to the following (in thousands).  No valuation allowance for the realization of deferred tax assets is considered necessary.

	2016		2015
Deferred tax assets
Allowance for loan losses	$	2,589	$	2,233
Other real estate owned		237		295
Nonaccrual loan interest		54		36
Accrued expenses		212		189
Acquisition market value adjustments		571		814
AMT tax credit		92		200
General business tax carryforward		—		244
Net operating loss carryforward		—		116
Unrealized loss on securities		492		—
Low income housing investments		150		—
Unearned income		362		—
Other		88		82
Deferred tax liabilities
Unrealized gain on securities		—		(185)
Bank premises and equipment		(1,041)		(1,109)
FHLB stock		(1,308)		(1,308)
Prepaid expenses		(260)		(263)
Mortgage servicing rights		(434)		(434)
Core deposit intangibles		(180)		(262)
Low income housing investments		—		(69)
Acquisition loan loss recapture		(236)		(193)
Other		(194)		(178)
Net deferred tax asset	$	1,194	$	208

Schedule of reconciliation of effective tax rates and federal statutory rates applied to financial statement income

	2016		2015		2014
U. S. federal income tax rate	34.0	%	34.0	%	34.0	%
Changes from the statutory rate
Tax-exempt interest income	(14.1)		(16.3)		(14.7)
Historic and low income tax credits	(9.4)		(8.2)		(7.0)
Insurance captive	(3.3)		(3.7)		(1.8)
Non-deductible interest expense related to carrying tax-exempt investments	0.4		0.4		0.4
Non-deductible merger expenses	—		0.9		—
Other	0.7		0.1		0.4
	8.3	%	7.2	%	11.3	%