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8. Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

The provision for income taxes is summarized as follows:

(Dollars in thousands)
		2015				2014				2013
Current expense		$	2,427				1,759				1,345
Deferred income tax expense			673				178				534
Total income tax		$	3,100				1,937				1,879

The differences between the provision for income taxes and the amount computed by applying the statutory federal income tax rate to earnings before income taxes are as follows:

(Dollars in thousands)
		2015				2014				2013
Tax expense at statutory rate (34%)		$	4,329				3,851				2,914
State income tax, net of federal income tax effect			494				(283	)			428
Tax-exempt interest income			(1,682	)			(1,630	)			(1,481	)
Increase in cash surrender value of life insurance			(143	)			(143	)			(147	)
Nondeductible interest and other expense			103				119				141
Other			(1	)			23				24
Total		$	3,100				1,937				1,879

The following summarizes the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities. The net deferred tax asset is included as a component of other assets at December 31, 2015 and 2014.

(Dollars in thousands)
		2015				2014
Deferred tax assets:
Allowance for loan losses		$	3,513				4,134
Accrued retirement expense			1,574				1,529
Other real estate			33				206
Federal credit carryforward			-				342
State credit carryforward			-				327
Restricted stock			417				243
Accrued bonuses			238				224
Interest income on nonaccrual loans			88				56
Other than temporary impairment			374				186
Other			16				152
Total gross deferred tax assets			6,253				7,399

Deferred tax liabilities:
Deferred loan fees			588				433
Accumulated depreciation			172				728
Prepaid expenses			59				101
Other			70				100
Unrealized gain on available for sale securities			3,308				3,479
Total gross deferred tax liabilities			4,197				4,841

Net deferred tax asset		$	2,056				2,558

The Company has analyzed the tax positions taken or expected to be taken in its tax returns and has concluded that it has no liability related to uncertain tax positions.

The Company's tax filings for years 2012 through 2015 were at year end 2015 open to audit under statutes of limitations by the Internal Revenue Service and State taxing authorities.