Entity information:
11. INCOME TAXES
The provision for income taxes consists of the following (in thousands):
 
 
 
Year Ended December 31,
 
 
 
2017
  
2016
  
2015
 
Currently payable
 
$
4,583
  
$
2,672
  
$
2,913
 
Change in corporate tax rate
  
1,531
   
-
   
-
 
Deferred tax
  
(83
)
  
362
   
(192
)
Provision for income taxes
 
$
6,031
  
$
3,034
  
$
2,721
 
The following temporary differences gave rise to the net deferred tax asset and liabilities at December 31, 2017 and 2016, respectively (in thousands):
 
 
 
2017
  
2016
 
Deferred tax assets:
      
    Allowance for loan losses
 
$
3,058
  
$
4,518
 
    Deferred compensation
  
464
   
757
 
    Merger & acquisition costs
  
7
   
16
 
    Allowance for losses on available-for-sale securities
  
6
   
250
 
    Pension and other retirement obligation
  
297
   
1,454
 
    Interest on non-accrual loans
  
917
   
1,259
 
    Incentive plan accruals
  
324
   
421
 
    Other real estate owned
  
108
   
152
 
    Unrealized losses on available-for-sale securities
  
71
   
-
 
    Low income housing tax credits
  
64
   
94
 
    NOL carry forward
  
339
   
709
 
    AMT Credit Carryforward
  
8
   
8
 
    Other
  
117
   
156
 
          Total
 
$
5,780
  
$
9,794
 
 
        
Deferred tax liabilities:
        
    Premises and equipment
 
$
(623
)
 
$
(998
)
    Investment securities accretion
  
(66
)
  
(189
)
    Loan fees and costs
  
(257
)
  
(369
)
    Goodwill and core deposit intangibles
  
(2,200
)
  
(3,573
)
    Mortgage servicing rights
  
(146
)
  
(233
)
    Unrealized gains on available-for-sale securities
  
-
   
(673
)
    Other
  
(7
)
  
(17
)
           Total
  
(3,299
)
  
(6,052
)
Deferred tax asset, net
 
$
2,481
  
$
3,742
 
 
No valuation allowance was established at December 31, 2017 and 2016, due to the Company's ability to carryback to taxes paid in previous years and certain tax strategies, coupled with the anticipated future taxable income as evidenced by the Company's earnings potential.
 
The total provision for income taxes is different from that computed at the statutory rates due to the following items (in thousands):
 
 
 
Year Ended December 31,
 
 
 
2017
  
2016
  
2015
 
Provision at statutory rates on
         
  pre-tax income
 
$
6,505
  
$
5,328
  
$
4,878
 
Effect of tax-exempt income
  
(1,710
)
  
(1,943
)
  
(1,915
)
Low income housing tax credits
  
(141
)
  
(198
)
  
(198
)
Bank owned life insurance
  
(225
)
  
(234
)
  
(214
)
Nondeductible interest
  
54
   
55
   
61
 
Nondeductible merger and acquisition expenses
  
-
   
-
   
102
 
Change in tax rate
  
1,531
   
-
   
-
 
Other items
  
17
   
26
   
7
 
Provision for income taxes
 
$
6,031
  
$
3,034
  
$
2,721
 
Statutory tax rates
  
34
%
  
34
%
  
34
%
Effective tax rates
  
31.6
%
  
19.4
%
  
19.0
%
 
The Company prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. With limited exception, the Company's federal and state income tax returns for taxable years through 2013 have been closed for purposes of examination by the federal and state taxing authorities.
 
Investments in Qualified Affordable Housing Projects
 
As of December 31, 2017 and 2016, the Company was invested in four partnerships that provide affordable housing. The balance of the investments, which is included within other assets in the Consolidated Balance Sheet, was $541,000 and $700,000 as of December 31, 2017 and 2016, respectively. Investments purchased prior to January 1, 2015, are accounted for utilizing the effective yield method. As of December 31, 2017, the Company has $705,000 of tax credits remaining that will be recognized over five years. Tax credits of $141,000, $198,000 and $198,000 were recognized as a reduction of tax expense during 2017, 2016 and 2015, respectively. Included within other expenses on the Consolidated Statement of Income was $159,000, $259,000 and $259,000 of amortization of the investments in qualified affordable housing projects for 2017, 2016 and 2015, respectively.