INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2016

The components of the provision (benefit) for income taxes are as follows:

	2016			2015		2014
Current	$	6,993		$	6,282	$	3,775
Deferred		(223	)		621		3,395
Change in valuation allowance		-			-		-
Provision for income taxes	$	6,770		$	6,903	$	7,170

The Company's deferred tax assets and liabilities at December 31 are shown below.

	2016			2015
Deferred tax assets
Allowance for loan losses	$	3,563		$	3,468
Purchase accounting adjustments		312			973
Net operating loss carryforward		513			545
Alternative minimum tax credit carryforward		517			-
Write-downs of other real estate owned		1,214			1,010
Taxable income on non-accrual loans		1,727			1,255
Accrued expenses		153			141
Unrealized loss on investment securities		1,035			-
Other		38			29
Total deferred tax assets		9,072			7,421

Deferred tax liabilities
Amortization of intangibles	$	(4,780	)	$	(4,685	)
Depreciation		(1,442	)		(1,000	)
Federal Home Loan Bank dividends		(355	)		(349	)
Deferred loan fees		(774	)		(664	)
Unrealized gain on investment securities		-			(166	)
Other		(161	)		(51	)
Total deferred tax liabilities		(7,512	)		(6,915	)

Valuation allowance on deferred tax assets		(160	)		(160	)
Net deferred taxes	$	1,400		$	346

An analysis of the differences between the effective tax rates and the statutory U.S. federal income tax rate is as follows:

	2016					2015					2014
U.S. federal income tax rate	$	6,630		35.0	%	$	6,579		34.0	%	$	6,909		34.0	%
Changes from the statutory rate
Impact of graduated federal tax rate		-		-			169		0.9			19		0.1
State income taxes, net		355		1.9			308		1.6			335		1.6
Tax-exempt interest income		(254	)	(1.4	)		(182	)	(0.9	)		(175	)	(0.9	)
Non-deductible interest expense related to carrying tax-exempt interest earning assets		15		0.1			11		0.1			12		0.1
Non-deductible stock compensation expense		26		0.1			34		0.1			55		0.3
Tax credits, net		(42	)	(0.2	)		(44	)	(0.2	)		(49	)	(0.2	)
Other		40		0.2			28		0.1			64		0.3
	$	6,770		35.7	%	$	6,903		35.7	%	$	7,170		35.3	%