INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2018

Significant components of the deferred tax assets and liabilities are as follows:

	June 30,		December 31,
	2018		2017
	(Dollars in thousands)
Deferred tax assets:
Loan loss reserves	$	4,495	$	4,452
Depreciation		655		413
Other real estate owned valuation		52		85
Tax credits carryforward		—		2,193
Unrealized loss on securities available for sale		1,690		241
Unrealized loss on securities held to maturity		201		217
Interest on nonaccrual loans		490		482
Net operating loss carryforward		—		914
Purchase accounting adjustment		260		442
Accrued bonuses		586		551
Other		131		176
Deferred tax assets		8,560		10,166
Deferred tax liabilities:
Deferred loan fees		1,476		1,145
Federal Home Loan Bank stock dividends		2,787		2,787
Mortgage servicing rights		1,453		1,401
FHLB prepayment penalty		143		307
Prepaid expenses		595		306
Deferred tax liabilities		6,454		5,946
Net deferred tax asset	$	2,106	$	4,220

Effective tax rates differ from the statutory federal income tax rate of 21% for 2018 and 35% for 2017 due to the following:

	For the Three Months Ended June 30,
	2018						2017
	Dollars			Rate			Dollars			Rate
	(Dollars in thousands)
Tax at statutory rate:	$	2,469			21.00	%	$	4,048			35.00	%
Increase (decrease) due to:
Tax exempt income		(147	)		(1.25	)%		(166	)		(1.44	)%
Life insurance		(91	)		(0.77	)%		(137	)		(1.18	)%
Stock compensation		(4	)		(0.03	)%		(138	)		(1.19	)%
Other		(13	)		(0.11	)%		(230	)		(1.99	)%
Income tax provision	$	2,214			18.83	%	$	3,377			29.20	%