Note 8: Income Taxes

The following table summarizes the current and deferred components of income tax expense (benefit) for each of the three years ended December 31:


		2014		2013			2012
Current
Federal	$	5,411	$	5,060		$	4,867
State		263		242			160
		5,674		5,302			5,027
Deferred		240		(111	)		(83	)
	$	5,914	$	5,191		$	4,944

The following table reconciles the expected federal income tax expense (computed by applying the federal statutory tax rate of 35%) to recorded income tax expense, for each of the three years ended December 31:


		2014			2013			2012

Computed tax expense	$	7,184		$	6,431		$	6,093
Increase (reduction) in income
taxes resulting from:
Officers' life insurance		(88	)		(82	)		(84	)
Tax exempt interest		(1,325	)		(1,199	)		(1,119	)
State taxes, net of federal benefit		171			157			104
Other		(28	)		(115	)		(50	)
	$	5,914		$	5,191		$	4,944

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 31, 2014 and 2013 are summarized below. The net deferred tax asset, which is included in other assets, amounted to $666 at December 31, 2014 and $8,609 at December 31, 2013.


		2014				2013
		Asset		Liability		Asset		Liability

Allowance for losses on loans and
other real estate owned	$	3,185	$	---	$	3,007	$	---
Deferred compensation		1,047		--		1,074		--
Unrealized gain or loss on
securities available for sale		--		3,866		3,898		--
Unfunded retirement benefits		263		--		192		--
Depreciation		--		572		--		713
Deferred loan origination costs		--		431		--		475
Other real estate owned		65		--		159		--
Non-accrual interest		158		--		145		--
Write down of impaired investments		1,195		--		1,641		--
Branch acquisition costs and goodwill		--		517		--		357
Prepaid expenses		--		199		--		235
Other		341		3		284		11
	$	6,254	$	5,588	$	10,400	$	1,791

The Company has determined that a valuation allowance is not required for its net deferred tax asset since it is more likely than not that this asset is realizable principally through the ability to carry-back to taxable income in prior years, future reversals of existing taxable temporary differences, and future taxable income.