10.INCOME TAXES

Allocation of federal and state income taxes between current and deferred portions is as follows:

	Years Ended
	December 31,
	2014			2013
	(In thousands)
Current tax provision:
Federal	$	697		$	580
State	183			144
	880			724
Deferred tax benefit:
Federal	(24		)	(236		)
State	(6		)	(68		)
	(30		)	(304		)

Total tax provision	$	850		$	420

The differences between the statutory federal income tax rate and the effective tax rates are summarized as follows:

	Years Ended
	December 31,
	2014		2013

Statutory rate	34.0	%	34.0	%
Increase (decrease) resulting from:
State taxes, net of federal tax benefit	5.0		4.3
Bank-owned life insurance	(1.5	)	(3.0	)
Stock compensation plans	0.9		1.5
Interest income from municipal securities	(0.9	)	(1.0	)
Other, net	(1.0	)	0.5

Effective tax rates	36.5	%	36.3	%

The components of the net deferred tax asset included in other assets are as follows:

	At December 31,
	2014			2013
	(In thousands)
Deferred tax assets:
Federal	$	1,195		$	1,374
State	347			391
	1,542			1,765
Deferred tax liabilities:
Federal	(718		)	(674		)
State	(189		)	(189		)
	(907		)	(863		)

Net deferred tax asset	$	635		$	902

The tax effects of each item that gives rise to deferred taxes are as follows:

	At December 31,
	2014			2013
	(In thousands)

Deferred compensation	$	556		$	510
Net unrealized (gain) loss on securities available for sale	(81		)	216
Depreciation and amortization	(387		)	(324		)
Allowance for loan losses	892			959
Mortgage servicing rights	(333		)	(423		)
Other, net	(12		)	(36		)

Net deferred tax asset	$	635		$	902

A summary of the change in the net deferred tax asset is as follows:

	Years Ended
	December 31,
	2014			2013
	(In thousands)

Balance at beginning of period	$	902		$	281
Deferred tax benefit	30			304
Deferred tax effects of net unrealized (gain) loss on securities available for sale	(297		)	317

Balance at end of period	$	635		$	902

The federal income tax reserve for loan losses at the Company’s base year is $723,000. If any portion of the reserve is used for purposes other than to absorb loan losses, approximately 150% of the amount actually used (limited to the amount of the reserve) would be subject to taxation in the fiscal year in which it is used. As the Company intends to use the reserve solely to absorb loan losses, a deferred tax liability of $289,000 has not been provided.

Uncertain tax positions

It is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. As of December 31, 2014 and 2013 there were no material uncertain tax positions related to federal and state income tax matters. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state taxing authorities for the years ended December 31, 2011 through December 31, 2014.