(16)Income Taxes

Allocation of federal and state income taxes between current and deferred provisions is as follows:


(Dollars in thousands)	2019		2018
Current
Federal	$	3,366	$	3,752
State		1,479		1,530
		4,845		5,282
Deferred
Federal		1,147		600
State		319		229
		1,466		829
Total	$	6,311	$	6,111

The federal statutory corporate tax rate for the years ended December 31, 2019 and 2018 was 21%. A reconciliation of the tax provision based on the statutory corporate rate on pretax income and the provision for taxes as shown in the accompanying Consolidated Statements of Income is as follows:


(Dollars in thousands)	2019			2018
Income tax expense at statutory rate	$	5,944		$	5,318
Income tax effect of:
Other tax-exempt income		(263)			(182)
Share-based compensation		(69)			1
Meal and entertainment expenses		82			88
State income taxes, net of federal income tax benefits		1,301			1,246
Tax benefit from the exercise of stock options		(297)			(134)
Tax benefit from tax depreciation study (1)		(402)			—
Other		15			(226)
Total income tax expense	$	6,311		$	6,111
Effective income tax rate		22.29	%		24.13	%

(1)

The Company conducted a study that reduced the asset lives used to calculate depreciation. The Company filed an amended tax return and was able to deduct the increase in depreciation expense at the 2017 federal corporate tax rate of 35% rather than the current 21% federal corporate tax rate.

The components of income taxes payable (receivable) are as follows:


	December 31,
(Dollars in thousands)	2019		2018
Current taxes payable:
Federal	$	767	$	621
State		1,538		1,786
	$	2,305	$	2,407
Deferred taxes receivable:
Federal	$	(1,651)	$	(2,836)
State		(968)		(1,300)
	$	(2,619)	$	(4,136)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:


	December 31,
(Dollars in thousands)	2019		2018
Deferred tax assets:
Premises and equipment	$	547	$	1,037
Hawaii franchise tax		479		468
Unfunded pension liability		925		691
Allowance for loan losses		722		703
Impaired asset write-down		—		765
Employee benefit plans		2,692		2,601
Equity incentive plan		350		399
Unrealized losses on securities available-for-sale		—		32
Deferred compensation		413		480
Net lease liability		161		—
Other		8		159
		6,297		7,335
Deferred tax liabilities:
Deferred loan costs		3,078		2,844
FHLB stock dividends		126		126
Prepaid expense		155		169
Unrealized gain on securities available-for-sale		185		—
Premiums on loans sold		134		60
		3,678		3,199
Net deferred tax assets	$	2,619	$	4,136

Deferred tax assets and liabilities at December 31, 2019 and 2018 were calculated using federal corporate tax rates of 21%.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income are reduced. There was no valuation allowance for deferred tax assets as of December 31, 2019 and 2018.