INCOME TAXES (Table)

12 Months Ended

Dec. 31, 2018

Schedule of Components of Income Tax Expense (Benefit)

The following table provides information on components of income tax expense for continuing operations for each of the two years ended December 31.


(Dollars in thousands)	2018		2017
Current tax expense:
Federal	$	4,110	$	4,258
State		1,167		-
		5,277		4,258
Deferred income tax (benefit) expense:
Federal		(120)		2,903
State		223		1,573
		103		4,476

Total income tax expense	$	5,380	$	8,734

Schedule of Effective Income Tax Rate Reconciliation

The following table provides a reconciliation of tax computed at the statutory federal tax rate to the actual tax expense for continuing operations for each of the two years ended December 31.


	2018		2017
Tax at federal statutory rate	21.0	%	35.0	%
Tax effect of:
Tax-exempt income	(0.5)		(1.0)
Other non-deductible expenses	0.2		0.1
State income taxes, net of federal benefit	5.2		5.1
Tax impact from enacted change in tax rate	-		7.6
Other	(0.5)		1.8
Actual income tax expense rate	25.4	%	48.6	%

Schedule of Deferred Tax Assets and Liabilities


	2018		2017
Tax at federal statutory rate	21.0	%	35.0	%
Tax effect of:
Tax-exempt income	(0.5)		(1.0)
Other non-deductible expenses	0.2		0.1
State income taxes, net of federal benefit	5.2		5.1
Tax impact from enacted change in tax rate	-		7.6
Other	(0.5)		1.8
Actual income tax expense rate	25.4	%	48.6	%

The following table provides information on significant components of the Company’s deferred tax assets and liabilities as of December 31. The Company recorded a provisional adjustment to our U.S. deferred income taxes as of December 31, 2017 to reflect the reduction in the U.S. statutory tax rate from 35% to 21% resulting from the Tax Act.


(Dollars in thousands)	2018		2017
Deferred tax assets:
Allowance for credit losses	$	2,797	$	2,625
Reserve for off-balance sheet commitments		81		81
Net operating loss carry forward		-		741
Write-downs of other real estate owned		273		212
Nonaccrual loan interest		260		95
Unrealized losses on available-for-sale securities		1,105		460
Unrealized losses on available-for-sale securities
transferred to held to maturity		12		20
Other		524		635
Total deferred tax assets		5,052		4,869
Deferred tax liabilities:
Depreciation		238		408
Acquisition on loans FMV adjustment		60		84
Purchase accounting adjustments		247		1,994
Deferred capital gain on branch sale		200		207
Other		125		241
Total deferred tax liabilities		870		2,934
Net deferred tax assets	$	4,182	$	1,935