Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

INCOME TAXES

NOTE 14 - INCOME TAXES

Income tax expense was as follows:

	2011		2010		2009
Current federal	$	—	$	198	$	(201	)
Deferred federal		—		—		1,778
Total	$	—	$	198	$	1,577

Effective tax rates differ from the federal statutory rate of 34% applied to loss before income taxes due to the following:

	2011			2010			2009
Federal statutory rate times financial statement loss	$	(1,845	)	$	(2,269	)	$	(2,827	)
Effect of:
Bank owned life insurance income		(44	)		(43	)		(43	)
Increase in deferred tax valuation allowance		1,876			2,276			4,312
Other		13			234			135
	$	—		$	198		$	1,577
Effective tax rate		0.0	%		-3.0	%		-19.0	%

Year-end deferred tax assets and liabilities were due to the following:

	2011			2010
Deferred tax assets:
Allowance for loan losses	$	1,775		$	2,339
Deferred loan fees		10			42
Post-retirement death benefits		64			61
Deferred compensation		85			88
Nonaccrual interest		80			76
Other real estate owned loss reserves		394			3
Tax mark-to-market adjustments on securities available for sale		131			228
Net operating loss carryforward		6,628			4,503
Other		120			79
		9,287			7,419
Deferred tax liabilities:
FHLB stock dividend		366			366
Mortgage servicing rights		12			19
Prepaid expenses		46			47
Unrealized gain on securities available for sale		131			228
Other		103			99
		658			759
Net deferred tax asset before valuation allowance		8,629			6,660
Deferred tax valuation allowance		(8,629	)		(6,660	)
Net deferred tax asset	$	—		$	—

Realization of deferred tax assets associated with the net operating loss carryforwards is dependent upon generating sufficient taxable income prior to their expiration. A valuation allowance to reflect management’s estimate of the temporary deductible differences that may expire prior to their utilization has been recorded at year-end 2011 and 2010, which reduced the carrying amount of the net deferred tax asset to zero in both years.

At year-end 2011, the Company had net operating loss carryforwards of approximately $19,495, which expire at various dates from 2024 to 2031.

Federal income tax laws provided additional bad debt deductions through 1987, totaling $2,250. Accounting standards do not require a deferred tax liability to be recorded on this amount, which otherwise would total $765 at year-end 2011. If CFBank were liquidated or otherwise ceases to be a bank or if tax laws were to change, this amount would be expensed.

At December 31, 2011 and 2010, the Company had no unrecognized tax benefits recorded. The Company does not expect the amount of unrecognized tax benefits to significantly change within the next twelve months.

The Company is subject to U.S. federal income tax and is no longer subject to federal examination for years prior to 2008.