Income Taxes

In accordance with current income tax accounting guidance, the Company assessed whether a valuation allowance should be established against their deferred tax assets (DTAs) based on consideration of all available evidence using a “more likely than not” standard. The most significant portions of the deductible temporary differences relate to (1) net operating loss carryforwards and (2) the allowance for loan losses.

In assessing the need for a valuation allowance, both the positive and negative evidence about the realization of DTAs were evaluated. The ultimate realization of DTAs is based on the Company’s ability to carryback net operating losses to prior tax periods, tax planning strategies that are prudent and feasible, the reversal of deductible temporary differences that can be offset by taxable temporary differences and future taxable income.

After evaluating all of the factors previously summarized and considering the weight of the positive evidence compared to the negative evidence, the Company has determined that no valuation allowance was necessary as of September 30, 2016 and December 31, 2015.

Below is a summary of items included in the deferred tax inventory as of September 30, 2016 and December 31, 2015:



	September 30, 2016			December 31, 2015
Deferred tax assets
Allowance for loan losses	$	3,510		$	3,342
Deferred compensation, other	430			74
Stock based expense	117			87
Net operating loss carryforwards	30,924			34,180
Securities available-for-sale	—			405
Deferred tax credits	1,030			823
OREO valuation allowance	922			1,059
Depreciation	211			—
Other	205			255
Total deferred tax assets	37,349			40,225
Deferred tax liabilities
Depreciation	$	—		$	(58	)
Adjustments arising from acquisitions	(95		)	(146		)
Mortgage servicing rights	(799		)	(828		)
Securities available-for-sale	(21		)	—
Federal Home Loan Bank dividend received in stock	(450		)	(450		)
Deferred loan fees & costs	(388		)	(399		)
Prepaid expenses	(164		)	(164		)
Total deferred tax liabilities	(1,917		)	(2,045		)
Valuation allowance	—			—
Net deferred tax assets	$	35,432		$	38,180