INCOME TAXES

The provision for federal income taxes consists of (in thousands):



	2016		2015		2014
Income taxes currently payable	$	3,515	4,280		3,194
Deferred income tax provision (benefit)	928		(58	)	192
Provision for income taxes	$	4,443	4,222		3,386

A reconciliation between the statutory income tax and the Company's effective tax rate follows:



	2016		2015		2014
Statutory tax rate	34.2	%	34.0	%	34.0	%
Increase (decrease) resulting from -
Tax exempt interest	(6.3	)%	(6.0	)%	(6.8	)%
Tax exempt income on bank owned life insurance	(1.5	)%	(1.4	)%	(1.7	)%
Other – net	(0.1	)%	0.3	%	—	%
Effective tax rate	26.3	%	26.9	%	25.5	%

Deferred tax assets and liabilities, included with Other Assets in the Consolidated Balance Sheets, at December 31 consist of the following (in thousands):



	2016			2015
Deferred tax assets:
Allowance for loan losses	$	1,223		1,064
Net unrealized losses on investment securities available-for-sale	1,369			246
Fair value adjustment on loans acquired from merger with First Capital	592			847
Write-down of other real estate owned	—			338
Pension and deferred compensation	1,157			971
Other	546			440
	4,887			3,906
Deferred tax liabilities:
Depreciation of premises and equipment	(1,332		)	(1,332	)
Amortization of intangibles	(1,567		)	(840	)
Deferred loan fees	(2		)	(2	)
FHLB stock dividends	(351		)	(349	)
Fair value adjustment on securities acquired from merger with First Capital	(19		)	(70	)
	(3,271		)	(2,593	)
Net deferred tax assets	$	1,616		1,313

As of December 31, 2016 and 2015 there were no unrecognized tax benefits and the Company does not anticipate the total amount of unrecognized tax benefits will significantly change within the next twelve months. There were no amounts recognized for interest and penalties in the consolidated statements of income for the three-year period ended December 31, 2016.

The Company is no longer subject to examination by federal tax authorities for years before 2013.