INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2015

Components of Income Tax Expense Attributable to Income from Operations

For the years ended December 31, 2015, 2014 and 2013, income tax expense attributable to income from operations consisted of the following (in thousands):



Current:	2015		2014			2013
State	$	216	$	606		$	395
Federal	3,668		5,366			3,548
Total current	3,884		5,972			3,943
Deferred expense/(benefit)	774		(2,263		)	(121		)
Income tax expense	$	4,658	$	3,709		$	3,822

Reconciliation of Income Tax Expense

Income tax expense differed from the amounts computed by applying the U.S. Federal statutory income tax rate to income before income tax expense as follows (in thousands):



	2015			2014			2013
Tax computed at statutory rate	$	4,791		$	4,034		$	4,268
Tax-exempt interest	(441		)	(456		)	(483		)
Dividend exclusion	(41		)	(60		)	(46		)
State taxes, net of Federal impact	238			227			188
Nondeductible interest expense	8			8			11
Other items, net	103			(44		)	(116		)
Income tax expense	$	4,658		$	3,709		$	3,822

Deferred Tax Assets and Deferred Tax Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2015 and 2014, are presented below (in thousands):



	2015		2014
Deferred tax assets:
Allowance for loan losses	$	5,385	$	5,182
Accrual for employee benefit plans	597		709
Depreciation	1,553		1,010
Deferred compensation and directors' fees	1,136		1,076
Purchase accounting adjustment – deposits	37		65
Purchase accounting adjustment – loans	130		259
Purchase accounting adjustment - fixed assets	221		221
Accounting for defined benefit pension and other benefit plans	6,975		6,624
Trust preferred impairment write down	—		540
Nonaccrued interest	868		617
Accrued expense	—		1,580
Other	288		456
Total gross deferred tax assets	17,190		18,339

Deferred tax liabilities:
Deferred loan fees and costs	933		910
Prepaid pension	4,609		5,179
Net unrealized gains on securities available for sale	130		1,359
Discount accretion	427		410
Core deposit intangible	1,437		1,479
Other	149		153
Total gross deferred tax liabilities	7,685		9,490
Net deferred tax asset	$	9,505	$	8,849