Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

The following is a summary of income tax expense for the years ended December 31, 2018, 2017, and 2016:



	2018			2017		2016
Current – federal	$	7,520		$	8,978	$	6,181
Current – state	66			29		(33		)
Deferred – federal	(1,076		)	376		1,023
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate	0			3,009		0
Income tax expense	$	6,510		$	12,392	$	7,171

Reconciliation of Income Tax Attributable to Pre-Tax Income at Federal Statutory Tax Rates to Income Tax Expense

The reconciliation of income tax attributable to pre-tax income at the federal statutory tax rates to income tax expense is as follows:



	2018			%		2017			%		2016			%
Tax at statutory rate	$	8,448		21.0		$	12,688		35.0		$	9,699		35.0
Tax exempt income, net	(1,403		)	(3.5	)	(1,899		)	(5.2	)	(2,054		)	(7.4	)
Deferred tax adjustment related to reduction in U.S. federal statutory income tax rate	0			0.0		3,009			8.3		0			0.0
Bank owned life insurance	(296		)	(0.7	)	(581		)	(1.6	)	(379		)	(1.3	)
Merger costs	0			0.0		0			0.0		170			0.6
Other	(239		)	(0.6	)	(825		)	(2.3	)	(265		)	(1.0	)
Income tax expense	$	6,510		16.2		$	12,392		34.2		$	7,171		25.9

Components of Net Deferred Tax Asset

The following table sets forth deferred taxes as of December 31, 2018 and 2017. As a result of the Tax Cuts and Jobs Act (discussed below), deferred taxes as of December 31, 2018 and 2017 are based on the enacted U.S. statutory federal income tax rate of 21%.



	2018		2017
Deferred tax assets:
Allowance for loan losses	$	3,088	$	2,840
Fair value adjustments – business combination	966		1,135
Deferred compensation	2,056		1,903
Net operating loss carryover	0		71
Post-retirement benefits	836		892
Unrealized loss on interest rate swap	42		34
Nonaccrual loan interest	589		390
Accrued expenses	1,254		699
Deferred fees and costs	588		598
Unrealized loss on securities available for sale	940		0
Other	366		344
	10,725		8,906
Deferred tax liabilities:
Unrealized gain on securities available for sale	0		126
Premises and equipment	1,459		1,413
Unrealized gain on trading securities	63		156
Intangibles – section 197	2,414		2,593
Mortgage servicing rights	314		291
Other	178		78
	4,428		4,657
Net deferred tax asset	$	6,297	$	4,249