INCOME TAXES:

Income tax expense is summarized as follows:



(Dollar amounts in thousands)	2015			2014		2013
Federal:
Currently payable	$	9,890		$	9,388	$	10,177
Deferred	(774		)	2,120		740
	9,116			11,508		10,917
State:
Currently payable	1,426			1,928		3,629
Deferred	(150		)	753		(779		)
	1,276			2,681		2,850
TOTAL	$	10,392		$	14,189	$	13,767

The reconciliation of income tax expense with the amount computed by applying the statutory federal income tax rate of 35% to income before income taxes is summarized as follows:



(Dollar amounts in thousands)	2015			2014			2013
Federal income taxes computed at the statutory rate	$	14,206		$	16,786		$	15,856
Add (deduct) tax effect of:
Tax exempt income	(4,047		)	(4,016		)	(3,760		)
ESOP dividend deduction	(164		)	(284		)	(105		)
State tax, net of federal benefit	829			1,743			1,852
Affordable housing credits	(148		)	(148		)	(148		)
Other, net	(284		)	108			72
TOTAL	$	10,392		$	14,189		$	13,767

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2015 and 2014, are as follows:



(Dollar amounts in thousands)	2015			2014
Deferred tax assets:
Other than temporary impairment	$	5,411		$	5,417
Net unrealized losses on retirement plans	12,007			16,068
Loan loss provisions	7,755			7,232
Deferred compensation	6,257			6,637
Compensated absences	917			894
Post-retirement benefits	2,026			2,014
Deferred loss on acquisition	1,177			1,377
Other	2,887			2,185
GROSS DEFERRED ASSETS	38,437			41,824
Deferred tax liabilities:
Net unrealized gains on securities available-for-sale	(5,234		)	(5,831		)
Depreciation	(2,632		)	(2,423		)
Mortgage servicing rights	(539		)	(561		)
Pensions	(424		)	(2,182		)
Intangibles	(2,283		)	(1,652		)
Other	(2,863		)	(2,173		)
GROSS DEFERRED LIABILITIES	(13,975		)	(14,822		)
NET DEFERRED TAX ASSETS	$	24,462		$	27,002

Unrecognized Tax Benefits — A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



(Dollar amounts in thousands)	2015			2014			2013
Balance at January 1	$	589		$	676		$	777
Additions based on tax positions related to the current year	68			72			65
Additions based on tax positions related to prior years	—			—			—
Reductions due to the statute of limitations	(144		)	(159		)	(166		)
Balance at December 31	$	513		$	589		$	676

Of this total, $513 represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next 12 months.

The total amount of interest and penalties recorded in the income statement for the years ended December 31, 2015, 2014 and 2013 was an expense decrease of $17, $21 and $31, respectively. The amount accrued for interest and penalties at December 31, 2015, 2014 and 2013 was $27, $44 and $65, respectively.

The Corporation and its subsidiaries are subject to U.S. federal income tax as well as income tax of the states of Indiana and Illinois. The Corporation is no longer subject to examination by taxing authorities for years before 2012.