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 2013.

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 was deemed necessary at December 31, 2016 and 2015.

Net deferred tax assets consist of the following components as of December 31, 2016 and 2015:



(Dollars in thousands)	2016		2015
Deferred tax assets:
Allowance for loan losses	$	3,877	$	3,756
Deferred compensation	687		647
Interest rate swap	67		99
Other real estate owned	288		257
Securities available for sale	654		—
Property and equipment	—		49
Other	1,427		2,028
Total deferred tax assets	$	7,000	$	6,836
Deferred tax liabilities:
Deferred loan costs, net	$	526	$	317
Securities available for sale	—		965
Property and equipment	79		—
Total deferred tax liabilities	$	605	$	1,282
Net deferred tax assets	$	6,395	$	5,554

The provision for income taxes charged to operations for the years ended December 31, 2016, 2015, and 2014, consists of the following:



(Dollars in thousands)	2016		2015		2014
Current tax expense	$	2,067	$	2,606	$	1,160
Deferred tax expense	746		109		1,181
Total income tax expense	$	2,813	$	2,715	$	2,341

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, 2016, 2015, and 2014, due to the following:



(Dollars in thousands)	2016			2015			2014
Computed "expected" tax expense	$	3,698		$	3,585		$	3,374
Increase (decrease) in income taxes resulting from:
Tax-exempt income	(796		)	(829		)	(959		)
Low income housing tax credits	(408		)	(120		)	(211		)
Merger related expenses	267			—			—
Other, net	52			79			137
	$	2,813		$	2,715		$	2,341