NOTE 13-Income Taxes

The following table presents the provision for income taxes for the years ended December 31, 2019, 2018 and 2017.



(dollars in thousands)		2019		2018		2017
Current tax provision
Federal	$	5,013	$	4,648	$	6,151
State		607		568		466
Total current tax provision		5,620		5,216		6,617

Deferred tax expense (benefit)
Federal		(573)		10		3,211
State		(22)		(44)		76
Total deferred tax expense (benefit)		(595)		(34)		3,287
Total tax provision	$	5,025	$	5,182	$	9,904

The differences between the effective income tax rate and the Federal statutory income tax rate for the years ended December 31, 2019, 2018 and 2017 are shown below.


	2019		2018		2017
Statutory tax rate	21.0	%	21.0	%	35.0	%
Increase (decrease) resulting from:
Tax-exempt interest income	(0.8)		(1.2)		(2.6)
Bank owned life insurance income	(1.1)		(0.8)		(1.6)
State income taxes, net of federal tax benefit	2.0		2.0		1.6
Other, net	0.2		0.0		0.2
Change in enacted tax rate	0.0		0.0		12.6
Effective income tax rate	21.3	%	21.0	%	45.2	%

On December 22, 2017, the Tax Cuts and Jobs Act was signed into law reducing the federal tax rate to 21 percent beginning on January 1, 2018. The revaluation of net deferred tax assets as of December 22, 2017 resulted in $2,755,000 of additional tax expense on the date of enactment. The impact on the 2017 effective tax rate is shown in the table above.

Significant components of the Corporation’s net deferred tax asset, included in other assets as of December 31, 2019 and 2018 are shown below.


(dollars in thousands)		2019		2018
Deferred tax assets
Allowance for loan losses	$	4,955	$	4,508
Deferred compensation		1,214		1,138
Leasing		82		0
Low-income housing partnerships		28		57
Acquisition accounting adjustments		102		106
Net unrealized losses on available-for-sale securities		0		592
Acquired net operating loss carryforwards		16		34
Other		65		92
Total deferred tax assets	$	6,462	$	6,527

Deferred tax liabilities
Deferred loan fees	$	718	$	842
Depreciation		505		446
Net unrealized gains on available-for-sale securities		348		0
Other		222		221
Total deferred tax liabilities	$	1,793	$	1,509
Net deferred tax assets	$	4,669	$	5,018

Based on the level of historical income projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes that, as of December 31, 2019, it is more likely than not that the Corporation will realize the benefits of its deferred tax assets.