Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

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 December 31, 2016			As of December 31, 2015
General expenses	$	1,685		$	1,569
Unearned premiums	2,046			2,039
Claims liabilities	746			730
Litigation settlement	—			1,748
AMT credit	1,230			816
Impairment on real estate owned	187			187
Unrealized loss on interest rate swaps	350			483
Deferred tax assets	6,244			7,572

Depreciation	(135		)	(111		)
Deferred policy acquisition costs	(2,839		)	(2,885		)
Unrealized gains on securities available-for-sale	(868		)	(752		)
Deferred tax liabilities	(3,842		)	(3,748		)
Net deferred tax asset	$	2,402		$	3,824

Changes in Temporary Differences in Federal Income Tax

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



	Year ended December 31,
	2016			2015
Deferred policy acquisition costs	$	(46	)	$	(36	)
Unearned premiums	(7		)	(78		)
General expenses	(116		)	(198		)
Depreciation	24			—
Claims liabilities	(16		)	119
Litigation settlement	1,748			292
AMT credit	(414		)	424
Deferred income tax expense	$	1,173		$	523

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:



	Year ended December 31,
	2016		2015
Federal income tax rate applied to pre-tax income/loss	34.0	%	34.0	%
Dividends received deduction and tax-exempt interest	(1.9	)%	(1.6	)%
Company owned life insurance	0.3	%	1.2	%
Small life deduction	(8.6	)%	(6.6	)%
Other, net	1.4	%	(1.0	)%
Effective federal income tax rate	25.2	%	26.0	%