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 March 31, 2017 and December 31, 2016.

Below is a summary of items included in the deferred tax inventory as of March 31, 2017 and December 31, 2016:



	March 31, 2017			December 31, 2016
Deferred tax assets
Allowance for loan losses	$	3,476		$	3,465
Deferred compensation, other	277			108
Stock based expense	84			66
Net operating loss carryforwards	29,096			30,166
Securities available-for-sale	379			655
Deferred tax credits	1,068			1,068
OREO valuation allowance	943			942
Depreciation	196			196
Other	180			204
Total deferred tax assets	35,699			36,870
Deferred tax liabilities
Depreciation	$	—		$	—
Adjustments arising from acquisitions	(29		)	(30		)
Mortgage servicing rights	(774		)	(791		)
Securities available-for-sale	—			—
Federal Home Loan Bank dividend received in stock	(241		)	(450		)
Deferred loan fees & costs	(376		)	(385		)
Prepaid expenses	(179		)	(179		)
Total deferred tax liabilities	(1,599		)	(1,835		)
Valuation allowance	—			—
Net deferred tax assets	$	34,100		$	35,035