Income Taxes (Tables)

9 Months Ended

Sep. 30, 2017

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, 2017			As of December 31, 2016
General expenses	$	1,691		$	1,685
Unearned premiums	2,225			2,046
Claims liabilities	782			746
AMT credit	1,390			1,230
NOL carryforward	500			—
Impairment on real estate owned	187			187
Unrealized loss on interest rate swaps	258			350
Deferred tax assets	7,033			6,244

Depreciation	(135		)	(135		)
Deferred policy acquisition costs	(2,872		)	(2,839		)
Unrealized gains on securities available-for-sale	(1,413		)	(868		)
Deferred tax liabilities	(4,420		)	(3,842		)
Net deferred tax asset	$	2,613		$	2,402

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,
	2017			2016
Deferred policy acquisition costs	$	33		$	77
Unearned premiums	(179		)	(167		)
General expenses	(6		)	3
Depreciation	—			6
Claims liabilities	(36		)	(9		)
AMT credit	(160		)	361
NOL carryforward	(500		)	—
Deferred income tax expense (benefit)	$	(848	)	$	271

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,
	2017		2016
Federal income tax rate applied to pre-tax income/loss	34.0	%	34.0	%
Dividends received deduction and tax-exempt interest	1.5	%	(1.4	)%
Company owned life insurance	1.0	%	(0.6	)%
Small life deduction	10.0	%	(5.9	)%
Other, net	(4.5	)%	0.2	%
Effective federal income tax rate	42.0	%	26.3	%