INCOME TAXES

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 16. INCOME TAXES

The following table provides information on income taxes receivable/payable and deferred taxes included in the balance sheets as of December 31, 2011 and 2010.

(Dollars in thousands)	2011		2010
Federal income taxes currently receivable (payable)	$	454	$	(512	)
State income taxes currently receivable (payable)		265		111
Net deferred tax asset		9,036		7,578

The following table provides information on components of income tax expense for each of the three years ended December 31.

(Dollars in thousands)	2011			2010			2009
Current tax expense:
Federal	$	656		$	1,940		$	4,078
State		236			473			1,262
		892			2,413			5,340
Deferred income tax benefit:
Federal		(1,233	)		(2,350	)		(708	)
State		(317	)		(555	)		(220	)
		(1,550	)		(2,905	)		(928	)
Total income tax (benefit) expense	$	(658	)	$	(492	)	$	4,412

The following table provides a reconciliation of tax computed at the statutory federal tax rate of 34.0% for both 2011 and 2010, and 34.2% for 2009 to the actual tax expense for the three years ended December 31.

(Dollars in thousands)	2011			2010			2009
Tax at federal statutory rate		34.0	%		34.0	%		34.2	%
Tax effect of:
Tax-exempt income		8.8			7.6			(1.6	)
Non-deductible goodwill impairment charges		(6.0	)		(24.3	)		-
Other non-deductible expenses		(2.1	)		(1.3	)		0.2
State income taxes, net of federal benefit		3.6			2.4			5.9
Other		4.0			4.4			(0.9	)
Actual income tax expense rate		42.3	%		22.8	%		37.8	%

The following table provides information on significant components of the Company’s deferred tax assets and liabilities as of December 31.

(Dollars in thousands)	2011		2010
Deferred tax assets:
Allowance for credit losses	$	5,640	$	5,652
Reserve for off-balance sheet commitments		137		198
Write-downs of other real estate owned		346		163
Net operating loss carry forward		212		258
Deferred income		2,055		1,244
Accrued employee benefits		1,187		1,049
Accrued data processing expenses		263		298
Unrealized losses on interest rate caps		2,070		1,884
Other		54		60
Total deferred tax assets		11,964		10,806
Deferred tax liabilities:
Depreciation		612		550
Purchase accounting adjustments		680		1,047
Deferred capital gain on branch sale		473		486
Deferred gains on interest rate swaps		169		169
Deferred loan costs		-		256
Unrealized gains on available-for-sale securities		928		650
Other		66		70
Total deferred tax liabilities		2,928		3,228
Net deferred tax assets	$	9,036	$	7,578