INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2019

INCOME TAXES

Schedule of Income before Income Tax, Domestic and Foreign

The significant components of the provision for income taxes for the years ended December 31, 2019, 2018 and 2017 are as follows:

	2019		2018		2017
	(dollars in thousands)
Current tax provision:
Federal	$	2,699	$	2,366	$	3,059
State		412		483		328
Total current tax provision		3,111		2,849		3,387
Deferred tax provision:
Federal		575		943		2,328
State		10		118		(3)
Total deferred tax provision		585		1,061		2,325
Net income tax provision	$	3,696	$	3,910	$	5,712

Federal Income Tax Note

The difference between the provision for income taxes and the amounts computed by applying the statutory federal income tax rate of 21% for 2019 and 2018 and 34% for 2017 to income before income taxes is summarized below:

	2019		2018		2017
	(dollars in thousands)
Income tax at federal statutory rate	$	3,513	$	3,715	$	3,025
Increase (decrease) resulting from:
State income taxes, net of federal tax effect		333		475		214
Tax-exempt interest income		(95)		(99)		(128)
Income from life insurance		(141)		(144)		(195)
Incentive stock option expense		41		(2)		39
Merger expenses		—		20		209
Impact of changes in tax rates		—		—		2,591
Other permanent differences		45		(55)		(43)
Provision for income taxes	$	3,696	$	3,910	$	5,712

Schedule of Deferred Tax Assets and Liabilities

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of deferred taxes at December 31, 2019 and 2018 are as follows:

	2019		2018
	(dollars in thousands)
Deferred tax assets relating to:
Allowance for loan losses	$	1,913	$	1,992
Deferred compensation		116		132
Unrealized losses on available-for-sale securities		—		(17)
Net operating loss carryforwards		541		999
Acquisition accounting		1,024		1,107
Write-downs on foreclosed real estate		120		108
Other		229		269
Total deferred tax assets		3,943		4,590
Deferred tax liabilities relating to:
Premises and equipment		(796)		(721)
Deferred loan fees/costs		(73)		(67)
Unrealized gains on available-for-sale securities		(268)		—
Core deposit intangible		(8)		(140)
Total deferred tax liabilities		(1,145)		(928)
Net recorded deferred tax asset, included in other assets	$	2,798	$	3,662