INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2014

Summary of provision for income tax benefit

A summary of the provision for income tax expense is as follows.

	Years Ended December 31,
	2014		2013		2012
	(Dollars in Thousands)
Federal
Current	$	16,659	$	4,289	$	63
Deferred		1,059		1,393		2,052
Provision for Federal income tax expense		17,718		5,682		2,115
State
Current		2,204		-		-
Deferred		186		809		320
Provision for state income tax expense		2,390		809		320
Provision for income tax expense	$	20,108	$	6,491	$	2,435

Components of effective federal and state tax rates to income before provision for income tax benefit

The actual income tax expense differs from the "expected" income tax expense (computed by applying the combined applicable effective federal and state tax rates to income before provision for income tax expense as follows).

	Years Ended December 31,
	2014			2013			2012
	(Dollars in Thousands)

Computed expected tax expense provision, at federal rate	$	19,887		$	6,535		$	2,294
State tax, net of federal deduction expense		1,696			698			245
Tax-exempt interest		(312	)		(31	)		(26	)
Dividend received deduction		(136	)		(97	)		(88	)
Stock option expense		-			(34	)		72
AMT Tax credit		-			-			(113	)
True-up / Rate Change		(1,027	)		(306	)		-
Other		-			(274	)		51
Provision for income tax expense	$	20,108		$	6,491		$	2,435

Components of net deferred tax asset

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our net deferred tax asset are as follows.

	Years Ended December 31,
	2014			2013
Deferred tax assets:
Unpaid losses and loss adjustment expenses	$	1,239		$	1,157
Unearned premiums		7,812			6,864
Discount on advance premiums		-			243
Allowance for credit losses		63			59
Allowance for impairments		20			21
Depreciation & amortization		13			149
Reserve for claims settlements		12			1,844
NOL Carryforward		-			73
Deferred revenue		36			-
Flow-through income or loss		-			4
Stock option expense per ASC 718		545			550
Total deferred tax assets		9,740			10,964

Deferred tax liabilities:
Deferred acquisition costs, net		(6,199	)		(6,287	)
Flow-through income or loss		(9	)		-
Dividends Collected vs. Earned		(12	)		(6	)
Regulatory assessments		(69	)		(67	)
Unrealized Gain on investment securities		(4,792	)		(3,598	)
Total deferred tax liabilities		(11,081	)		(9,958	)
Net deferred tax (liability) asset	$	(1,341	)	$	1,006