NOTE 13, Income Taxes

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

	2016				2015
	(in thousands)
Current income tax expense		$	179		$	281
Deferred income tax benefit			(19	)		(227	)
Reported income tax expense		$	160		$	54

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,
	2016			2015
	(in thousands)
Expected tax expense (34%)	$	1,345		$	1,254
Interest expense on tax-exempt assets		15			22
Low-income housing tax credits		(384	)		(274	)
Tax-exempt interest		(608	)		(654	)
Bank-owned life insurance		(270	)		(301	)
Other, net		62			7
Reported income tax expense	$	160		$	54

The effective tax rates for 2016 and 2015 were 4.0% and 1.5%, respectively.

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

	December 31,
	2016			2015
	(in thousands)
Deferred tax assets:
Allowance for loan losses	$	2,803		$	2,631
Interest on nonaccrual loans		71			67
Other real estate owned		349			867
Pension - other comprehensive income		1,272			1,332
Bank owned life insurance benefit		94			88
Charitable contributions carried forward		1			109
Net unrealized loss on securities available-for-sale		896			297
Unexercised nonqualified options		36			36
Alternative minimum tax		1,019			610
Deferred benefits and compensation		256			347
Other		89			78
	$	6,886		$	6,462

Deferred tax liabilities:
Depreciation	$	(822	)	$	(854	)
Accretion of discounts on securities		(1	)		(1	)
Deferred loan fees and costs		(325	)		(293	)
Pension		(740	)		(874	)
		(1,888	)		(2,022	)
Net deferred tax assets	$	4,998		$	4,440

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 2013.