INCOME TAXES

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 deferred tax assets and liabilities as of December 31, 2016 and 2015 are as follows (in thousands):



	2016		2015
Deferred tax assets:
Allowance for loan losses	$	9,177	$	7,750
Unrealized losses on securities	890		—
Core deposit intangible	436		351
Deferred compensation	696		712
Other	241		55
Total deferred tax assets	11,440		8,868
Deferred tax liabilities:
Premises and equipment	3,318		3,634
Goodwill	1,820		1,446
FHLB stock dividends	80		70
Unrealized gains on cash flow hedges	346		—
Unrealized gains on securities	—		274
Prepaid expenses	306		323
Purchase accounting adjustments on securities	753		854
Other	245		95
Total deferred tax liabilities	6,868		6,696
Net deferred tax asset	$	4,572	$	2,172

Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, the Company believes that it is more likely than not that it will realize the benefits of these deductible differences existing at December 31, 2016. Therefore, no valuation allowance is necessary at this time. The net deferred tax assets for 2016 and 2015 are included in other assets on the consolidated balance sheets.

Components of income tax expense are as follows (in thousands):



	2016			2015			2014
Current	$	5,439		$	6,368		$	8,847
Deferred benefit	(1,582		)	(1,785		)	(1,489		)
Total income tax expense	$	3,857		$	4,583		$	7,358

The provision for federal income taxes differs from the amount computed by applying the U.S. Federal income tax statutory rate of 35% on pre-tax income as follows (in thousands):



	December 31,
	2016			2015			2014
Taxes calculated at statutory rate	$	4,654		$	5,460		$	9,264
Increase (decrease) resulting from:
Tax-exempt interest, net	(615		)	(766		)	(923		)
Executive officer life insurance proceeds	—			—			(1,050		)
Other	(182		)	(111		)	67
	$	3,857		$	4,583		$	7,358

The Company’s federal income tax returns are open and subject to examination from the 2013 tax return year and forward. The various state income and franchise tax returns are generally open from the 2013 and later tax return years based on individual state statutes of limitation. We are not currently under examination by federal or state tax authorities for the 2013, 2014, or 2015 tax years.