Income tax expense for the years ending December 31, 2016, 2015 and 2014 was as follows:

 

		December 31, 2016			December 31, 2015			December 31, 2014
					(Dollars in Thousands)
Current – federal		$	961		$	-		$	-
Current – state			139			-			-
Deferred – federal			2,409			(684)			5,328
Deferred – state, net of federal tax effect			226			(31)			453
Decrease in valuation allowance – federal			(93)			(7,905)			(5,328)
Decrease in valuation allowance – state			(10)			(887)			(453)
Income tax expense (benefit)		$	3,632		$	(9,507)		$	-

The effective tax rate differs from the statutory federal income tax rate for the years ending December 31, 2016, 2015 and 2014 as follows:

 

		December 31, 2016				December 31, 2015				December 31, 2014
						(Dollars in Thousands)
Income taxes at current statutory rate of 34%		$	3,417			$	(608)			$	451
Increase (decrease) from:
State income tax, net of federal tax effect			318				(22)				(52)
Tax-exempt income			(32)				(31)				(32)
Increase in cash surrender value of bank owned life insurance			(158)				(163)				(171)
Stock option expense			171				6				2
Change related to Internal Revenue Code § 382 net operating loss carryover limitations			4				80				5,619
Change in federal valuation allowance			(93)				(7,905)				(5,328)
Change in state valuation allowance			(10)				(887)				(453)
Other, net			15				23				(36)
Income tax expense (benefit)		$	3,632			$	(9,507)			$	-
Effective tax rate			36.1	%			0.0	%			0.0	%

Deferred tax assets and liabilities as of December 31, 2016 and 2015 were as follows:

 

		December 31, 2016			December 31, 2015
		(Dollars in Thousands)
Deferred tax assets:
Allowance for portfolio loan losses		$	3,027		$	2,887
Other real estate owned			894			1,010
Net operating loss carryover – limited by Internal Revenue Code § 382			2,010			2,552
Net operating loss carryover – unlimited			31			1,186
Net unrealized loss on securities available-for-sale			518			345
Deferred loan fees			210			567
Alternative minimum tax carryover			527			527
Other			905			1,036
Total deferred tax assets			8,122			10,110
Valuation allowance – federal			(24)			(117)
Valuation allowance – state			(3)			(13)
Total deferred tax assets, net of valuation allowance			8,095			9,980
Deferred tax liability:
Depreciation			(514)			(242)
Deferred loan costs			(271)			(194)
Prepaid expenses			(272)			(214)
Other			(286)			(223)
Total deferred tax liability			(1,343)			(873)
Net deferred tax asset		$	6,752		$	9,107