NOTE 13, Income Taxes

The components of income tax expense for the current and prior year-ends are as follows:

	2015				2014
	(in thousands)
Current income tax expense		$	281		$	297
Deferred income tax benefit			(227	)		(101	)
Reported income tax expense		$	54		$	196

A reconciliation of the expected federal income tax expense on income before income taxes with the reported income tax expense for the same periods follows:

	Years Ended December 31,
	2015			2014
	(in thousands)
Expected tax expense (34%)	$	1,254		$	1,466
Interest expense on tax-exempt assets		22			24
Low-income housing tax credits		(274	)		(324	)
Tax-exempt interest		(654	)		(631	)
Bank-owned life insurance		(301	)		(289	)
Other, net		7			(50	)
Reported tax expense	$	54		$	196

The effective tax rates for 2015 and 2014 were 1.5% and 4.6%, respectively.

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

	December 31,
	2015			2014
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	2,631		$	2,397
Interest on nonaccrual loans		67			100
Other real estate owned		867			989
Pension - other comprehensive income		1,332			1,252
Bank owned life insurance benefit		88			83
Charitable contributions carried forward		109			92
Net unrealized loss on securities available-for-sale		297			40
Net unrealized loss on securities transferred from available-for-sale to held-to-maturity		0			1,744
Unexercised nonqualified options		36			36
Alternative minimum tax		610			269
Deferred benefits and compensation		347			166
Other		78			70
	$	6,462		$	7,238

Deferred tax liabilities:
Depreciation	$	(854	)	$	(696	)
Accretion of discounts on securities		(1	)		0
Deferred loan fees and costs		(293	)		(295	)
Pension		(874	)		(627	)
		(2,022	)		(1,618	)
Net deferred tax assets	$	4,440		$	5,620

The Company files income tax returns in the U.S. federal jurisdiction and the Commonwealth of Virginia. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2012.