INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Provision for Federal 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

Reconciliation Between Statutory Income Tax and Effective Tax Rate

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	%

Schedule of Deferred Tax Assets and Liabilities

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