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Income Taxes
12 Months Ended
Dec. 31, 2018
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 14 - INCOME TAXES

Income taxes were as follows for the years ended December 31:

 

 

 

2018

 

 

2017

 

 

2016

 

Current

 

$

2,444

 

 

$

5,414

 

 

$

6,449

 

State

 

 

45

 

 

 

 

 

 

 

Deferred

 

 

151

 

 

 

435

 

 

 

170

 

Change in corporate tax rate

 

 

 

 

 

511

 

 

 

 

Income taxes

 

$

2,640

 

 

$

6,360

 

 

$

6,619

 

 

Effective tax rates differ from the statutory federal income tax rate of 21% in 2018 and 35% in 2017 and 2016 due to the following:

 

 

 

2018

 

 

2017

 

 

2016

 

Income taxes computed at the statutory federal tax

   rate

 

$

3,524

 

 

$

7,781

 

 

$

8,343

 

Add (subtract) tax effect of:

 

 

 

 

 

 

 

 

 

 

 

 

Nontaxable interest income, net of nondeductible

   interest expense

 

 

(834

)

 

 

(1,107

)

 

 

(946

)

Low income housing tax credit

 

 

(903

)

 

 

(686

)

 

 

(435

)

Cash surrender value of BOLI

 

 

(143

)

 

 

(201

)

 

 

(197

)

Nondeductible merger costs

 

 

1,034

 

 

 

 

 

 

 

Change in corporate tax rate

 

 

 

 

 

511

 

 

 

 

Other

 

 

(38

)

 

 

62

 

 

 

(146

)

Income tax expense

 

$

2,640

 

 

$

6,360

 

 

$

6,619

 

 

The Tax Cut and Jobs Act, enacted on December 22, 2017, lowered the federal corporate income tax rate from 35% to 21% effective January 1, 2018.  As a result, the carrying value of net deferred tax assets was reduced, which increased income tax expense by $511 for the year ended December 31, 2017.

NOTE 14 - INCOME TAXES (Continued)

Year-end deferred tax assets and liabilities were due to the following:

 

 

 

2018

 

 

2017

 

Deferred tax assets

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

3,056

 

 

$

2,848

 

Deferred compensation

 

 

1,217

 

 

 

1,213

 

Intangible assets

 

 

475

 

 

 

95

 

Purchase accounting adjustments

 

 

566

 

 

 

 

Net operating loss carryforward

 

 

1,374

 

 

 

 

Other

 

 

364

 

 

 

141

 

Deferred tax asset

 

 

7,052

 

 

 

4,297

 

Deferred tax liabilities

 

 

 

 

 

 

 

 

Tax depreciation in excess of book depreciation

 

 

(556

)

 

 

(275

)

Discount accretion on securities

 

 

(31

)

 

 

(43

)

Purchase accounting adjustments

 

 

 

 

 

(536

)

FHLB stock dividends

 

 

(1,053

)

 

 

(1,053

)

Unrealized gain on securities available for sale

 

 

(624

)

 

 

(847

)

Pension costs

 

 

(469

)

 

 

(293

)

Prepaids

 

 

(301

)

 

 

(320

)

BOLI

 

 

(337

)

 

 

 

Other

 

 

(271

)

 

 

(166

)

Deferred tax liability

 

 

(3,642

)

 

 

(3,533

)

Net deferred tax asset

 

$

3,410

 

 

$

764

 

 

No valuation allowance was established at December 31, 2018 and 2017, due to the Company’s ability to carryback to taxes paid in previous years and certain tax strategies, coupled with the anticipated future income as evidenced by the Company’s earning potential.

The Company and its subsidiaries are subject to U.S. federal income tax. The Company is subject to tax in Ohio based upon its net worth and in Indiana based upon its net income.

There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company’s federal tax returns for taxable years through 2012 have been closed for purposes of examination by the Internal Revenue Service.