Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction and the state of Virginia and various other states. With few exceptions, the Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years prior to 2011.

The Company believes it is more likely than not that the benefit of deferred tax assets will be realized. Consequently, no valuation allowance for deferred tax assets is deemed necessary at December 31, 2014 and 2013.

Net deferred tax assets consist of the following components as of December 31, 2014 and 2013:



(Dollars in thousands)	2014		2013
Deferred tax assets:
Allowance for loan losses	$	4,007	$	4,508
Deferred compensation	613		581
Investment in affiliate	—		401
Interest rate swap	98		15
Other real estate owned	256		263
Other	1,833		2,204
Total deferred tax assets	$	6,807	$	7,972
Deferred tax liabilities:
Deferred loan costs, net	$	125	$	25
Securities available for sale	2,050		135
Property and equipment	55		222
Total deferred tax liabilities	$	2,230	$	382
Net deferred tax assets	$	4,577	$	7,590

The provision for income taxes charged to operations for the years ended December 31, 2014, 2013, and 2012, consists of the following:



(Dollars in thousands)	2014		2013			2012
Current tax expense	$	1,160	$	2,315		$	759
Deferred tax expense (benefit)	1,181		(384		)	1,207
Total income tax expense	$	2,341	$	1,931		$	1,966

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income for the years ended December 31, 2014, 2013, and 2012, due to the following:



(Dollars in thousands)	2014			2013			2012
Computed "expected" tax expense	$	3,374		$	2,749		$	2,874
Increase (decrease) in income taxes resulting from:
Tax-exempt income	(959		)	(1,037		)	(975		)
Other, net	(74		)	219			67
	$	2,341		$	1,931		$	1,966