13. INCOME TAXES

The expense for income taxes is summarized below:


	YEAR ENDED DECEMBER 31,
	2015		2014		2013
	(IN THOUSANDS)
Current	$	1,455	$	1,036	$	139
Deferred		888		562		2,150
Income tax expense	$	2,343	$	1,598	$	2,289

The reconciliation between the federal statutory tax rate and the Company’s effective consolidated income tax rate is as follows:


	YEAR ENDED DECEMBER 31,
	2015						2014						2013
	AMOUNT			RATE			AMOUNT			RATE			AMOUNT			RATE
	(IN THOUSANDS, EXCEPT PERCENTAGES)
Income tax expense based on federal statutory rate	$	2,836			34.0	%	$	1,571			34.0	%	$	2,544			34.0	%
Tax exempt income		(574	)		(6.9	)		(274	)		(5.9	)		(359	)		(4.8	)
Other		81			1.0			301			6.5			104			1.4
Total expense for income taxes	$	2,343			28.1	%	$	1,598			34.6	%	$	2,289			30.6	%

The following table highlights the major components comprising the deferred tax assets and liabilities for each of the periods presented:


	AT DECEMBER 31,
	2015			2014
	(IN THOUSANDS)
DEFERRED TAX ASSETS:
Allowance for loan losses	$	3,373		$	3,272
Unfunded commitment reserve		298			300
Premises and equipment		1,602			1,433
Accrued pension obligation		1,658			2,358
Net operating loss carryforwards		—			242
Alternative minimum tax credits		2,248			2,820
Other		487			349
Total tax assets		9,666			10,774
DEFERRED TAX LIABILITIES:
Investment accretion		(16	)		(25	)
Unrealized investment security gains		(420	)		(950	)
Other		(237	)		(251	)
Total tax liabilities		(673	)		(1,226	)
Net deferred tax asset	$	8,993		$	9,548

At December 31, 2015 and 2014, the Company had no valuation allowance established against its deferred tax assets as we believe the Company will generate sufficient future taxable income to fully utilize all net operating loss carryforwards and alternative minimum tax (AMT) credits.

The change in net deferred tax assets and liabilities consist of the following:


	YEAR ENDED DECEMBER 31,
	2015			2014
	(IN THOUSANDS)
Unrealized gains recognized in comprehensive income	$	530		$	(404	)
Pension obligation of the defined benefit plan not yet recognized in income		(197	)		942
Deferred provision for income taxes		(888	)		(562	)
Net decrease	$	(555	)	$	(24	)

The Company has AMT credit carryforwards of approximately $2.2 million at December 31, 2015. These credits have an indefinite carryforward period. The Company has fully recognized all of its net operating loss carryforward in 2015.

The Company utilizes 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 fifty 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. The Company has no tax liability for uncertain tax positions. The Company’s federal and state income tax returns for taxable years through 2012 have been closed for purposes of examination by the Internal Revenue Service and the Pennsylvania Department of Revenue.