INCOME TAXES

The components of income tax expense for the years ended December 31, 2015, 2014 and 2013, are as follows:



In thousands	2015		2014		2013
Federal:
Current	$	3,316	$	2,152	$	1,800
Deferred	392		875		693
	3,708		3,027		2,493
State:
Current	53		53		42
	$	3,761	$	3,080	$	2,535

Reconciliations of the statutory federal income tax at a rate of 34% to the income tax expense reported in the consolidated statements of income for the years ended December 31, 2015, 2014 and 2013, are as follows:



	Percentage of Income before Income Taxes
	2015		2014		2013
Federal income tax at statutory rate	34.0	%	34.0	%	34.0	%
State income taxes, net of federal benefit	0.2	%	0.3	%	0.2	%
Tax-exempt income	(4.4	)%	(3.5	)%	(4.6	)%
Earnings on investment in bank-owned life insurance	(2.5	)%	(2.8	)%	(2.8	)%
Rehabilitation and low-income housing credits	(2.0	)%	(5.1	)%	(5.7	)%
Other	0.2	%	0.1	%	0.3	%
	25.5	%	23.0	%	21.4	%

The provision for federal income taxes includes $89,000, $21,000 and $0 of income taxes related to net gains on sales of securities in 2015, 2014 and 2013, respectively. Rehabilitation and low-income housing income tax credits were $299,000, $678,000, and $678,000 during 2015, 2014 and 2013, respectively. Projected credits are $287,000 in 2016 and 2017, and $1,450,000 thereafter.

Components of deferred tax assets and liabilities at December 31 were as follows:



In thousands	2015		2014
Deferred tax assets:
Allowance for loan losses	$	5,014	$	5,159
Accrued deferred compensation	1,008		903
Pension	3,034		2,727
Deferred loan fees	4		67
Other-than-temporary impairment	178		178
Nonaccrual interest	168		176
Deferred director fees	576		496
Other	644		695
	10,626		10,401
Deferred tax liabilities:
Available for sale securities	600		1,324
Prepaid pension benefit cost	6,505		6,466
Prepaid expenses	166		168
Accumulated depreciation	331		188
Goodwill/intangibles	873		743
	8,475		8,889
Net Deferred Tax Asset	$	2,151	$	1,512

The Corporation did not have any uncertain tax positions at December 31, 2015 and 2014. The Corporation’s policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the Consolidated Statements of Income.

Years that remain open for potential review by the Internal Revenue Service are 2012 through 2015.