INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Provision for Federal Income Taxes

The provision for federal income taxes consists of (in thousands):

	2017			2016	2015
Income taxes currently payable	$	3,018		3,515	4,280
Revaluation of net deferred tax liability	(224		)	—	—
Deferred income tax provision (benefit)	1,478			928	(58	)
Provision for income taxes	$	4,272		4,443	4,222

Reconciliation Between Statutory Income Tax and Effective Tax Rate

A reconciliation between the statutory income tax and the Company's effective tax rate follows:

	2017		2016		2015
Statutory tax rate	34.0	%	34.0	%	34.0	%
Increase (decrease) resulting from -
Tax exempt interest	(6.0	)%	(6.3	)%	(6.0	)%
Tax exempt income on bank owned life insurance	(1.7	)%	(1.5	)%	(1.4	)%
Revaluation of net deferred tax liability	(1.3	)%	—	%	—	%
Captive insurance premium income	(0.9	)%	—	%	—	%
Other – net	0.7	%	0.1	%	0.3	%
Effective tax rate	24.8	%	26.3	%	26.9	%

Schedule of Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities, included in the Consolidated Balance Sheets with accrued interest and other liabilities in 2017 and other assets in 2016, consist of the following at December 31 (in thousands):

	2017			2016
Deferred tax assets:
Allowance for loan losses	$	715		1,223
Net unrealized losses on investment securities available-for-sale	707			1,369
Fair value adjustment on loans acquired from merger with First Capital	238			592
Pension and deferred compensation	760			1,157
Other	471			546
	2,891			4,887
Deferred tax liabilities:
Depreciation of premises and equipment	(1,672		)	(1,332	)
Amortization of intangibles	(1,030		)	(1,567	)
Prepaid expenses	(210		)	—
Deferred loan fees	(1		)	(2	)
FHLB stock dividends	(216		)	(351	)
Fair value adjustment on securities acquired from merger with First Capital	(9		)	(19	)
	(3,138		)	(3,271	)
Net deferred tax (liabilities) assets	$	(247	)	1,616