FEDERAL INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2020

FEDERAL INCOME TAXES [Abstract]

Income Tax Expense

Income tax expense was as follows (dollars in thousands):

	Three Months Ended June 30, 2020			Three Months Ended June 30, 2019		Six Months Ended June 30, 2020			Six Months Ended June 30, 2019
Current	$	2,970		$	1,851	$	4,671		$	3,319
Deferred		(1,211	)		65		(1,483	)		311
	$	1,759		$	1,916	$	3,188		$	3,630

Difference between Financial Statement Tax Expense and Amount Computed by Applying Statutory Federal Tax Rate to Pretax Income

The difference between the financial statement tax expense and amount computed by applying the statutory federal tax rate to pretax income was reconciled as follows (dollars in thousands):

	Three Months Ended June 30, 2020			Three Months Ended June 30, 2019			Six Months Ended June 30, 2020			Six Months Ended June 30, 2019
Statutory rate		21	%		21	%		21	%		21	%
Statutory rate applied to income before taxes	$	1,974		$	2,083		$	3,620		$	4,049
Deduct
Tax-exempt interest income		(177	)		(173	)		(355	)		(340	)
Bank-owned life insurance		(48	)		(52	)		(99	)		(102	)
Other, net		10			58			22			23
	$	1,759		$	1,916		$	3,188		$	3,630

Deferred Tax Assets and Liabilities

The net deferred tax asset recorded included the following amounts of deferred tax assets and liabilities (dollars in thousands):

	June 30, 2020			December 31, 2019
Deferred tax assets
Allowance for loan losses	$	3,330		$	3,612
Net deferred loan fees		1,748			—
Nonaccrual loan interest		154			182
Valuation allowance on other real estate owned		83			76
Other		299			248
Gross deferred tax assets		5,614			4,118
Valuation allowance		(92	)		(92	)
Total net deferred tax assets		5,522			4,026
Deferred tax liabilities
Depreciation		(1,124	)		(1,053	)
Prepaid expenses		(171	)		(172	)
Unrealized gain on securities available for sale		(1,213	)		(406	)
Net deferred loan costs		—			(67	)
Other		(260	)		(250	)
Gross deferred tax liabilities		(2,768	)		(1,948	)
Net deferred tax asset	$	2,754		$	2,078