Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Note 10: Income Taxes

The provision for income taxes includes the following components at December 31, 2016 and 2015:

	2016			2015
	(In thousands)
Taxes currently payable	$	751		$	270
Deferred income taxes		(43	)		143
Income tax expense	$	708		$	413

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

	2016			2015
	(In thousands)
Computed at the statutory rate (34%)	$	972		$	668
Increase (decrease) resulting from
Tax-exempt interest		(196	)		(223	)
Earnings on bank-owned life insurance		(101	)		(100	)
Other		33			68
Actual tax expense	$	708		$	413

The tax effects of temporary differences related to deferred taxes shown on the consolidated balance sheets were as follows:

	2016			2015
	(In thousands)
Deferred tax assets
Deferred loan origination fees	$	254		$	260
Allowance for loan losses		1,034			965
Real estate owned valuation		3			2
Pension adjustment		255			368
Reserve for uncollected interest		197			182
Benefit plan expenses		115			97
AMT credit carryover and low income           housing credit		—			12
Total deferred tax assets		1,858			1,886
Deferred tax liabilities
Prepaid pension		(154	)		(221	)
Federal Home Loan Bank stock dividends		(1,023	)		(1,023	)
Book/tax depreciation differences		(541	)		(560	)
Financed loan fees		(130	)		(129	)
Unrealized gains on securities available-or-sale		(55	)		(264	)
Mortgage servicing rights		(139	)		(125	)
Total deferred tax liabilities		(2,042	)		(2,322	)
Net deferred tax liability	$	(184	)	$	(436	)

Prior to fiscal 1997, the Company was allowed a special bad debt deduction based on a percentage of earnings, generally limited to 8% of otherwise taxable income and subject to certain limitations based on aggregate loans and deposit account balances at the end of the year. This cumulative percentage of earnings bad debt deduction totaled approximately $2.7 million as of December 31, 2016. If the amounts that qualified as deductions for federal income taxes are later used for purposes other than bad debt losses, including distributions in liquidation, such distributions will be subject to federal income taxes at the then current corporate income tax rate. The amount of unrecognized deferred tax liability relating to the cumulative bad debt deduction was approximately $918,000 at December 31, 2016.