INCOME TAXES

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 14. INCOME TAXES

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

(Dollars in thousands)	2013		2012		2011
Current tax (benefit) expense:
Federal	$	(459)	$	(2,007)	$	656
State		90		210		236
		(369)		(1,797)		892
Deferred income tax benefit:
Federal		(4,592)		(3,110)		(1,233)
State		(1,540)		(1,658)		(317)
		(6,132)		(4,768)		(1,550)
Total income tax benefit	$	(6,501)	$	(6,565)	$	(658)

The following table provides a reconciliation of tax computed at the statutory federal tax rate of 34.0% to the actual tax expense for each of the three years ended December 31.

(Dollars in thousands)	2013		2012		2011
Tax at federal statutory rate	34.0	%	34.0	%	34.0	%
Tax effect of:
Tax-exempt income	0.4		0.6		8.8
Non-deductible goodwill impairment charges	-		-		(6.0)
Other non-deductible expenses	(0.2)		(0.2)		(2.1)
State income taxes, net of federal benefit	5.9		5.9		3.6
Other	0.2		0.2		4.0
Actual income tax expense rate	40.3	%	40.5	%	42.3	%

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

(Dollars in thousands)	2013		2012
Deferred tax assets:
Allowance for credit losses	$	4,298	$	6,421
Reserve for off-balance sheet commitments		180		166
Net operating loss carry forward		14,430		3,367
Write-downs of other real estate owned		400		742
Deferred income		1,108		2,370
Accrued expenses		936		1,353
Loss on termination of cash flow hedge		-		540
Unrealized losses on interest rate caps		-		803
Unrealized losses on available-for-sale securities		296		-
Other		83		55
Total deferred tax assets		21,731		15,817
Deferred tax liabilities:
Depreciation		463		515
Purchase accounting adjustments		1,305		1,009
Deferred capital gain on branch sale		438		451
Deferred gains on interest rate swaps		-		169
Unrealized gains on available-for-sale securities		-		1,282
Other		435		208
Total deferred tax liabilities		2,641		3,634
Net deferred tax assets	$	19,090	$	12,183

No valuation allowance for deferred tax assets was recorded at December 31, 2013 and 2012 as management believes it is more likely than not that all of the deferred tax assets will be realized because they were supported by the expected generation of a sufficient level of future taxable income from operations and tax planning strategies. At December 31, 2013, the Company had Federal and state net operating loss carryforwards of approximately $33.6 million and $50.1 million, respectively, which expire in 2033 through 2034.