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INCOME TAXES (Tables)
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Components of Income Tax Expense Attributable to Income from Operations
For the years ended December 31, 2019, 2018 and 2017, income tax expense attributable to income from operations consisted of the following (in thousands):
 
 
2019
 
2018
 
2017
Current expense:
 
 
 
 
 
 
Federal
 
$
4,603

 
$
1,732

 
$
2,594

State
 
395

 
124

 
417

Total current
 
4,998

 
1,856

 
3,011

Deferred expense/(benefit):
 
 
 
 
 
 
Federal
 
(1,126
)
 
2,253

 
942

State
 
(438
)
 
345

 
382

Remeasurement of deferred tax assets
 

 
(445
)
 
2,927

Total deferred
 
(1,564
)
 
2,153

 
4,251

Income tax expense
 
$
3,434

 
$
4,009

 
$
7,262

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):
 
 
2019
 
2018
 
2017
Statutory federal tax rate
 
21
%
 
21
%
 
34
%
Tax computed at statutory rate
 
$
3,999

 
$
4,963

 
$
5,006

Increase (reduction) resulting from:
 
 
 
 
 
 
Tax-exempt income
 
(424
)
 
(430
)
 
(663
)
831(b) premium adjustment
 
(189
)
 
(167
)
 
(269
)
Dividend exclusion
 
(7
)
 
(7
)
 
(8
)
State taxes, net of Federal impact
 
(86
)
 
262

 
201

Nondeductible interest expense
 
9

 
7

 
8

Remeasurement of deferred tax assets
 

 
(445
)
 
2,927

Other items, net
 
132

 
(174
)
 
60

Income tax expense
 
$
3,434

 
$
4,009

 
$
7,262

Effective tax rate
 
18.0
%
 
17.0
%
 
49.4
%
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, 2019 and 2018, are presented below (in thousands):
 
 
2019
 
2018
Deferred tax assets:
 
 
 
 
Allowance for loan losses
 
$
6,046

 
$
4,834

Accrual for employee benefit plans
 
92

 
136

Depreciation
 
379

 
(93
)
Deferred compensation and directors' fees
 
765

 
634

Operating lease liabilities
 
2,050

 

Purchase accounting adjustment – loans
 
1

 
7

Purchase accounting adjustment – fixed assets
 
149

 
149

Gain on deemed sale of securities
 
71

 
339

Net unrealized losses on securities available for sale
 

 
1,590

Accounting for defined benefit pension and other benefit plans
 
2,448

 
2,315

Nonaccrued interest
 
695

 
625

Accrued expense
 
179

 
200

Other items, net
 
38

 
153

Total gross deferred tax assets
 
12,913

 
10,889

 
 
 
 
 
Deferred tax liabilities:
 
 
 
 
Deferred loan fees and costs
 
592

 
640

Prepaid pension
 
3,189

 
3,141

Net unrealized gains on securities available for sale
 
468

 

Discount accretion
 
24

 
137

Core deposit intangible
 
1,213

 
1,101

REIT dividend
 
922

 
1,048

Operating lease right-of-use assets
 
2,050

 

Other
 
103

 
109

Total gross deferred tax liabilities
 
8,561

 
6,176

Net deferred tax asset
 
$
4,352

 
$
4,713