Income Taxes (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of Deferred Tax Assets and Liabilities

The tax effect of significant differences representing deferred tax assets and liabilities are as follows (dollars in thousands):



	As of September 30, 2015			As of December 31, 2014
General expenses	$	1,428		$	1,371
Unearned premiums	2,167			1,961
Claims liabilities	839			849
Litigation settlement	2,040			2,040
AMT credit	755			1,240
Impairment on real estate owned	187			187
Unrealized loss on interest rate swaps	534			421
Deferred tax assets	7,950			8,069

Depreciation	(101		)	(111		)
Deferred policy acquisition costs	(2,947		)	(2,921		)
Unrealized gains on securities available-for-sale	(1,357		)	(1,848		)
Deferred tax liabilities	(4,405		)	(4,880		)
Net deferred tax asset	$	3,545		$	3,189

Changes in Temporary Differences in Federal Income Tax

The appropriate income tax effects of changes in temporary differences are as follows (dollars in thousands):



	Nine months ended September 30,
	2015			2014
Deferred policy acquisition costs	$	26		$	42
Unearned premiums	(206		)	(257		)
General expenses	(57		)	(23		)
Depreciation	(10		)	(14		)
Claims liabilities	10			(275		)
AMT credit	485			(144		)
NOL carryforward	—			849

Deferred income tax expense	$	248		$	178

Schedule of Effective Income Tax Rate Reconciliation

Total income tax expense (benefit) varies from amounts computed by applying current federal income tax rates to income or loss before income taxes. The reasons for these differences and the approximate tax effects are as follows:



	Nine months ended September 30,
	2015		2014
Federal income tax rate applied to pre-tax income/loss	34.0	%	34.0	%
Dividends received deduction and tax-exempt interest	(1.6	)%	(1.5	)%
Company owned life insurance	1.5	%	(9.9	)%
Small life deduction	(4.3	)%	(6.6	)%
Other, net	(2.4	)%	1.4	%
Effective federal income tax rate	27.2	%	17.4	%