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Other Assets | 3 Months Ended
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Mar. 31, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] |
Other Assets Disclosure [Text Block] | Note 5 – Other Assets The Company had the following other assets at March 31, 2016 and December 31, 2015.
(Dollars in thousands) |  | March 31, 2016 |  | December 31, 2015 |
Nonmarketable investment securities |  | $ | 1,650 |  | $ | 1,621 |
Accrued interest receivable |  |  | 2,602 |  |  | 2,458 |
Deferred income taxes |  |  | 10,234 |  |  | 12,132 |
Prepaid expenses |  |  | 1,605 |  |  | 1,039 |
Other assets |  |  | 6,297 |  |  | 6,670 |
Total |  | $ | 22,388 |  | $ | 23,920 |
The following table provides information on significant components of the Company’s deferred tax assets and liabilities as of March 31, 2016 and December 31, 2015.
(Dollars in thousands) |  | March 31, 2016 |  | December 31, 2015 |
Deferred tax assets: |  |  |  |  |  |  |
Allowance for credit losses |  | $ | 3,318 |  | $ | 3,316 |
Reserve for off-balance sheet commitments |  |  | 121 |  |  | 121 |
Net operating loss carry forward |  |  | 7,413 |  |  | 9,069 |
Write-downs of other real estate owned |  |  | 303 |  |  | 308 |
Deferred income |  |  | 1,220 |  |  | 1,155 |
Unrealized gains on available-for-sale securities |  |  | - |  |  | 48 |
Accrued expenses |  |  | 928 |  |  | 946 |
AMT carryover |  |  | 395 |  |  | - |
Other |  |  | 185 |  |  | 191 |
Total deferred tax assets |  |  | 13,883 |  |  | 15,154 |
Deferred tax liabilities: |  |  |  |  |  |  |
Depreciation |  |  | 243 |  |  | 271 |
Amortization on loans FMV adjustment |  |  | 192 |  |  | 140 |
Purchase accounting adjustments |  |  | 2,036 |  |  | 1,988 |
Deferred capital gain on branch sale |  |  | 409 |  |  | 411 |
Unrealized gains on available-for-sale securities |  |  | 593 |  |  | - |
Other |  |  | 176 |  |  | 212 |
Total deferred tax liabilities |  |  | 3,649 |  |  | 3,022 |
Net deferred tax assets |  | $ | 10,234 |  | $ | 12,132 |
The Company’s deferred tax assets consist of net operating loss carryovers that will be used to offset taxable income in future periods through their statutory period of 20 years for federal tax purposes. As of December 31, 2015 18 years of the statutory period remain available to offset future taxable income. No valuation allowance on these deferred tax assets was recorded at March 31, 2016 and December 31, 2015 as management believes it is more likely than not that all deferred tax assets will be realized based on the following positive material factors: 1) The Company was profitable for all four quarters of 2015 and the first quarter of 2016 on a GAAP basis. The net operating loss was originally created in the third quarter of 2013 and was solely attributable to Talbot Bank’s sale of loans and other real estate owned (the “Asset Sale”), which is considered non-recurring. 2) The Company had pre-tax income of $4.0 million and $11.5 million for the quarter and year ended March 31, 2016 and December 31, 2015, providing further evidence that the Asset Sale was producing positive results and confirming the expectation of utilizing the deferred tax assets. 3) As a contingent opportunity, the Company has had discussions with certain investors about entering into a sales leaseback transaction for some of its branch locations which would generate a material taxable gain. The decision to act on this has been deferred; however, it would become a very viable option as a tax planning strategy if there was a risk that the net operating loss carryovers would expire before they were fully utilized. Alternatively, the Company has reviewed negative factors which would influence the conclusion of realizing the deferred tax assets. These factors include the following: 1) The Company could be subject to Section 382 of the Internal Revenue Code (“IRC”), which could further limit the realization of the net operating loss-related deferred tax asset (“NOL-DTA”). 2) Although the local economy of the market in which the Company operates has been showing continued signs of improvement over the past three years, if this trend flattens or reverses, there is a potential that this potential negative evidence could outweigh the prevailing positive factors. Based on the aforementioned considerations, the Company has concluded that the predominance of observable positive evidence outweighs the future potential of negative evidence and therefore it is more likely than not that the Company will be able to realize in the future all of the net deferred tax assets.

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