10.INCOME TAXES

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


	Years Ended
	December 31,
	2015		2014
	(In thousands)

Current tax provision:
Federal	$	1,051	$	697
State		258		183
		1,309		880
Deferred tax benefit:
Federal		(293)		(24)
State		(85)		(6)
		(378)		(30)

Total tax provision	$	931	$	850

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


	Years Ended
	December 31,
	2015		2014

Statutory rate	34.0	%	34.0	%
Increase (decrease) resulting from:
State taxes, net of federal tax benefit	4.7		5.0
Bank-owned life insurance	(1.4)		(1.5)
Stock compensation plans	1.5		0.9
Interest income from municipal securities	(0.8)		(0.9)
Other, net	—		(1.0)

Effective tax rates	38.0	%	36.5	%

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


	At December 31,
	2015		2014
	(In thousands)
Deferred tax assets:
Federal	$	1,320	$	1,195
State		384		347
		1,704		1,542
Deferred tax liabilities:
Federal		(498)		(718)
State		(141)		(189)
		(639)		(907)

Net deferred tax asset	$	1,065	$	635

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


	At December 31,
	2015		2014
	(In thousands)

Deferred compensation	$	612	$	556
Net unrealized gain on securities available for sale		(29)		(81)
Depreciation and amortization		(363)		(387)
Allowance for loan losses		964		892
Mortgage servicing rights		(207)		(333)
Other, net		88		(12)

Net deferred tax asset	$	1,065	$	635

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


	Years Ended
	December 31,
	2015		2014
	(In thousands)

Balance at beginning of period	$	635	$	902
Deferred tax benefit		378		30
Deferred tax effects of net unrealized loss (gain) on securities
available for sale		52		(297)

Balance at end of period	$	1,065	$	635

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, 2015 and 2014 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, 2012 through December 31, 2015.