NOTE 16 – INCOME TAXES

The Company and its subsidiary are subject to U.S. federal and state income tax. The components of income tax expense for the years ended December 31, 2014 and 2013 are as follows:



(Dollars in thousands)	2014		2013

Current:
Federal	$	1,402	$	(1,117)
State		524		115
		1,926		(1,002)
Deferred:
Federal		(689)		1,000
State		(236)		135
		(925)		1,135
	$	1,001	$	133

The reconciliation of the statutory federal income tax at a rate of 34% to the income tax expense included in the statements of income and comprehensive income for the years ended December 31, 2014 and 2013 is as follows:



(Dollars in thousands)	2014				2013

Federal income tax at statutory rate	$	1,224	34	%	$	531	34	%
Tax exempt interest		(327)	(9)			(357)	(23)
State income tax, net of federal income tax effect		190	5			76	5
Bank-owned life insurance		(110)	(3)			(120)	(8)
Other		24	1			3	0
	$	1,001	28	%	$	133	8	%

The components of the net deferred tax asset at December 31, 2014 and 2013 are as follows:



(Dollars in thousands)	2014		2013

Deferred tax assets:
Allowance for loan losses	$	2,253	$	2,165
Deferred compensation		679		594
Foreclosed real estate		204		299
AMT credit		391		-
Intangible assets		22		28
Restricted stock		55		143
Other-than-temporary impairment		-		118
Unrealized loss on securities available for sale		-		1,434
Other		397		266
Total deferred tax assets		4,001		5,047
Deferred tax liabilities:
Depreciation		(285)		(804)
Prepaid expenses		(143)		(161)
Unrealized gain on securities, available for sale		(113)		-
Total deferred tax liabilities		(541)		(965)
Net deferred tax asset	$	3,460	$	4,082