(10)	Income Taxes

The provision for income tax expense consists of the following for the years ended December 31:

	2014		2013		2012
Current:
Federal	$	1,254	$	1,145	$	666
State		561		44		2

		1,815		1,189		668
Deferred:
Federal		674		1,243		472
State		301		422		583

		975		1,665		1,055

	$	2,790	$	2,854	$	1,723

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2014 and 2013 consist of:

	2014		2013
Deferred tax assets:
Allowance for loan losses	$	3,858	$	4,176
Deferred compensation		243		316
Retirement compensation		1,525		1,423
Stock option compensation		264		252
Post retirement benefits		425		290
Current state franchise taxes		186		15
Non-accrual interest		230		141
Net operating loss		—		63
Tax credit carryovers		937		1,720
Investment securities unrealized loss		—		426
Other		32		19

Deferred tax assets		7,700		8,841

Deferred tax liabilities:
Fixed assets depreciation		1,364		1,291
FHLB dividends		260		260
Tax credit – loss on pass-through		155		223
Deferred loan costs		1,038		918
Investment securities unrealized gain		469		—

Total deferred tax liabilities		3,286		2,692

Net deferred tax assets (see Note 7)	$	4,414	$	6,149

Based upon the level of historical taxable income and projections for future taxable income over the periods during which the deferred tax assets are deductible, management believes it is more-likely-than-not the Company will realize the benefits of these deductible differences.

At December 31, 2014, the Company had no state net operating loss carry forwards and $937 of federal tax credit carry forwards expiring on various dates ranging from 2028 through 2034.

A reconciliation of income taxes computed at the federal statutory rate of 34% and the provision for income taxes is as follows:

	2014			2013			2012

Income tax expense at statutory rates	$	2,944		$	2,801		$	2,166
Reduction for tax exempt interest		(165	)		(191	)		(166	)
State franchise tax, net of federal benefit		569			457			408
Cash surrender value of life insurance		(154	)		(154	)		(155	)
Solar credit amortization		(179	)		(201	)		(359	)
Other		(225	)		142			(171	)

	$	2,790		$	2,854		$	1,723

Accounting for Uncertainty in Income Taxes

The Company had unrecognized tax benefits of $12 for the years ended December 31, 2014 and December 31, 2013. The Company did not recognize a change in unrecognized tax benefits during 2014. The Company does not anticipate any significant increase or decrease in unrecognized tax benefits during 2015. If recognized, the entire amount of the unrecognized tax benefits would affect the effective tax rate.

The Company classifies interest and penalties as a component of the provision for income taxes. At December 31, 2014, unrecognized interest and penalties were $1. The tax years ended December 31, 2013, 2012, 2011, and 2010 remain subject to examination by the Internal Revenue Service. The tax years ended December 31, 2013, 2012, 2011, and 2010 remain subject to examination by the California Franchise Tax Board. The deductibility of these tax positions will be determined through examination by the appropriate tax authorities or the expiration of the tax statute of limitations.