INCOME TAXES

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 15. INCOME TAXES

The income tax expense included in the consolidated statements of operations is displayed in the table below for the years ended December 31, 2016, 2015 and 2014 (dollars in thousands).

	December 31,
	2016			2015			2014
Current	$	3,816		$	3,897		$	1,279
Deferred		(207	)		(386	)		(134	)
	$	3,609		$	3,511		$	1,145

The provision for federal income taxes differs from that computed by applying the federal statutory rate of 35% in 2016 and 2015, and 34% in 2014, as indicated in the following analysis for the years ended December 31, 2016, 2015 and 2014 (dollars in thousands).

	December 31,
	2016			2015			2014
Tax based on statutory rate	$	3,921		$	3,704		$	2,224
Decrease resulting from:
Effect of tax-exempt income		(273	)		(142	)		(118	)
Historical tax credits		10			(62	)		(1,002	)
Other		(49	)		11			41
Total income tax expense	$	3,609		$	3,511		$	1,145
Effective rate		31.4	%		33.2	%		17.5	%

The Company records deferred income tax on the tax effect of changes in timing differences.

The net deferred tax asset was comprised of the following items as of the dates indicated (dollars in thousands).

	December 31,
	2016			2015			2014
Deferred tax liabilities:
Depreciation	$	(1,650	)	$	(1,402	)	$	(1,435	)
FHLB stock dividend		(20	)		(5	)		(16	)
Basis difference in acquired assets and liabilities		(276	)		(26	)		-
Unrealized gain on available for sale securities		-			-			(62	)
Gross deferred tax liability		(1,946	)		(1,433	)		(1,513	)
Deferred tax assets:
Provision for loan losses		2,150			1,588			879
Provision for other real estate losses		266			328			517
Unrealized loss on available for sale securities		1,115			357			-
Unamortized start-up cost		123			147			165
Net operating loss carryforward		299			412			617
Deferred gain on sale of other real estate		33			35			-
Basis difference in acquired assets and liabilities		-			-			46
Historical tax credit		243			247			226
Other		585			234			160
Gross deferred tax assets		4,814			3,348			2,610
Net deferred tax asset	$	2,868		$	1,915		$	1,097

The Company acquired net operating loss (“NOL”) carryforwards through tax free acquisitions. As of December 31, 2016 and December 31, 2015, the Company’s NOL carryforwards were approximately $0.9 million and $1.2 million, respectively, and expire in 2033.

As of December 31, 2016 and December 31, 2015, the Company’s general business credit was $12,000 which expires in 2028.

The Company files income tax returns under U.S. federal jurisdiction and the state of Louisiana, although the state of Louisiana does not assess an income tax on income resulting from banking operations. With few exceptions, the Company is no longer subject to U.S. federal and state examinations by tax authorities for years before 2013.