13.

INCOME TAXES

Significant components of the deferred tax assets and liabilities are as follows:

	March 31,		December 31,
	2017		2016
	(Dollars in thousands)
Deferred tax assets:
Loan loss reserves	$	6,460	$	6,680
Depreciation		828		748
Other real estate owned valuation		192		354
Tax credits carryforward		1,736		1,471
Unrealized loss on securities available for sale		1,165		1,685
Unrealized loss on securities held to maturity		413		431
Interest on nonaccrual loans		980		1,039
Net operating loss carryforward		9,672		8,574
Purchase accounting adjustment		1,353		—
Accrued bonuses		574		812
Other		152		221
Deferred tax assets		23,525		22,015
Deferred tax liabilities:
Deferred loan fees		1,437		1,275
Federal Home Loan Bank stock dividends		4,645		4,585
Mortgage servicing rights		2,091		2,124
FHLB prepayment penalty		717		786
Purchase accounting adjustment		—		371
Prepaid expenses		171		139
Deferred tax liabilities		9,061		9,280
Net deferred tax asset	$	14,464	$	12,735

As of March 31, 2017, the net deferred tax asset was $14.5 million, and as of December 31, 2016, the net deferred tax asset was $12.7 million.

The Company’s ultimate realization of the net deferred tax asset is dependent upon the generation of future taxable income during the periods in which temporary differences become deductible. Management considers the nature and amount of historical and projected future taxable income, the scheduled reversal of deferred tax assets and liabilities, and available tax planning strategies in making this assessment. The amount of deferred taxes recognized could be impacted by changes to any of these variables.

United Community’s net operating loss of $27.6 million at March 31, 2017 will be carried forward to use against future taxable income. The net operating loss carryforwards begin to expire in the year ending December 31, 2030. In addition, United Community is carrying forward $1.7 million of alternative minimum tax credits. The alternative minimum tax credits are carried forward indefinitely.