Note 8.

Income Taxes

Income tax expense in the consolidated statements of income for the years ended December 31, 2015 and 2014, includes the following (in thousands):

	2015		2014
Current tax expense
Federal	$	77	$	1,973
State		167		433
Deferred tax expense (benefit) related to:
Provision for loan losses		(250)		84
Depreciation		(12)		195
Fair value adjustments		312		(924)
Nonaccrual interest		121		(99)
Foreclosed real estate		1,008		(40)
Core deposit intangible		(89)		(63)
Other		307		(441)
Total income tax expense	$	1,641	$	1,118

The income tax expense is different from the expected tax expense computed by multiplying income before income tax expense by the statutory income tax rates. The reasons for this difference are as follows (in thousands):

	2015		2014
Federal income tax expense computed at the statutory rate	$	1,071	$	1,003
State income taxes, net of federal tax benefit		176		127
Nondeductible acquisition expenses		295		-
Other		99		(12)
Total income tax expense	$	1,641	$	1,118

The components of the net deferred tax asset as of December 31, 2015 and 2014, were as follows (in thousands):

	2015		2014
Deferred tax assets:
Allowance for loan losses	$	1,667	$	1,361
Fair value adjustments		4,219		1,354
Foreclosed real estate		656		418
Deferred compensation		253		191
State net operating loss carryforward		339		-
Other		618		706
Total deferred tax assets		7,752		4,030
Deferred tax liabilities:
Accumulated depreciation		1,699		603
Core deposit intangible		1,063		99
Other		743		530
Total deferred tax liabilities		3,505		1,232
Net deferred tax asset	$	4,247	$	2,798

The income tax returns of the Company for 2014, 2013, and 2012 are subject to examination by the federal and state taxing authorities, generally for three years after they were filed.