INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

INCOME TAXES [Abstract]

Provision for Income Taxes

The provision for income taxes for the years ended December 31, is as follows:

(In thousands)	2012			2011
Current	$	1,205		$	(149	)
Deferred		(276	)		1,193
	$	929		$	1,044
The provision for income taxes includes the following:
(In thousands)		2012			2011
Federal Income Tax	$	873		$	968
New York State Franchise Tax		56			76
	$	929		$	1,044

Component of the Net Deferred Tax (Liability) Asset

The components of the net deferred tax (liability) asset, included in other assets or other liabilities as of December 31, are as follows:

(In thousands)	2012			2011
Assets:
Deferred compensation	$	833		$	832
Allowance for loan losses		1,741			1,540
Postretirement benefits		174			156
Mortgage recording tax credit carryforward		206			277
Impairment losses on investment securities		337			342
Capital loss carryforward		293			307
AMT credit carryforward		-			59
Pension liability		-			85
Other		284			106
Total		3,868			3,704
Liabilities:
Pension asset		(511	)		-
Depreciation		(703	)		(749	)
Accretion		(52	)		(45	)
Loan origination fees		(176	)		(221	)
Intangible assets		(1,486	)		(1,409	)
Investment securities and financial derivative		(1,008	)		(636	)
Prepaid expenses		(52	)		(114	)
Total		(3,988	)		(3,174	)
		(120	)		530
Less: deferred tax asset valuation allowance		(458	)		(458	)
Net deferred tax (liability) asset	$	(578	)	$	72

Reconciliation of the Federal Statutory Income Tax Rate to the Effective Income Tax Rate

A reconciliation of the federal statutory income tax rate to the effective income tax rate for the years ended December 31, is as follows:

	2012			2011
Federal statutory income tax rate		34.0	%		34.0	%
State tax, net of federal benefit		1.0			1.5
Tax-exempt interest income		(7.3	)		(4.4	)
Increase in value of bank owned life insurance less premiums paid		(2.3	)		(1.9	)
Gain on proceeds from bank owned life insurance		(0.4	)		-
Other		1.0			1.8
Effective income tax rate		26.0	%		31.0	%