14. INCOME TAXES

Income tax expense (benefit) for the three and nine months ended September 30, 2016 and 2015 was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015

	(Dollars in thousands)

Income tax expense (benefit) for the period	$	($4,831)	$	$ 2,528	$	($1,757)	$	$ 7,576
Effective Tax Rate		35.0%		38.3%		33.3%		37.1%

The effective tax rates differ from the statutory federal tax rate of 35% largely due to tax exempt interest income earned on certain investment securities and loans and the nontaxable earnings on bank owned life insurance.

Net deferred tax assets totaled $20.1 million at September 30, 2016 and $19.5 million at December 31, 2015. No valuation allowance was recorded against deferred tax assets as of those dates, as management believes it is more likely than not that all of the deferred tax assets will be realized because they were supported by recoverable taxes paid in prior years.