INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

Summary of Expense for Income Taxes Included in Consolidated Statement of Operations

The income tax expense included in the consolidated statements of income is displayed in the table below for the years ended December 31, 2018, 2017 and 2016 (dollars in thousands).



	December 31,
	2018		2017		2016
Current	$	2,789	$	4,003	$	3,816
Deferred	841		245		(207		)
Total income tax expense	$	3,630	$	4,248	$	3,609

Summary of Provision for Federal Income Taxes Differs from that Computed by Applying the Federal Statutory Rate

The provision for federal income taxes differs from that computed by applying the federal statutory rate of 21% in 2018, and 35% in 2017 and 2016, as indicated in the following analysis for the years ended December 31, 2018, 2017 and 2016 (dollars in thousands).



	December 31,
	2018			2017			2016
Tax based on statutory rate	$	3,619		$	4,258		$	3,921
Increase (decrease) resulting from:
Effect of tax-exempt income	(249		)	(422		)	(273		)
Acquisition costs	29			174			—
Historical tax credits	6			10			10
Effect of tax rate change	338			292			—
Other	(113		)	(64		)	(49		)
Total income tax expense	$	3,630		$	4,248		$	3,609
Effective rate	21.1		%	34.1		%	31.4		%

Summary of Deferred Tax Assets and Liabilities

The net deferred tax asset was comprised of the following items as of the dates indicated (dollars in thousands).



	December 31,
	2018			2017			2016
Deferred tax liabilities:
Depreciation	$	(2,515	)	$	(1,652	)	$	(1,650	)
FHLB stock dividend	(79		)	(28		)	(20		)
Basis difference in acquired assets and liabilities	(785		)	(900		)	(276		)
Other	(20		)	(20		)	—
Gross deferred tax liability	(3,399		)	(2,600		)	(1,946		)

Deferred tax assets:
Allowance for loan losses	1,915			1,549			2,150
Provision for other real estate losses	274			155			266
Unrealized loss on available for sale securities	818			418			1,115
Net operating loss carryforward	128			154			299
Deferred compensation	225			302			25
Basis difference in acquired assets and liabilities	442			839			253
Historical tax credit	160			144			243
Employee and director stock awards	306			208			234
Other	276			125			229
Gross deferred tax assets	4,544			3,894			4,814
Net deferred tax asset	$	1,145		$	1,294		$	2,868