Federal Income Taxes

12 Months Ended

Dec. 31, 2011

Federal Income Taxes [Abstract]

FEDERAL INCOME TAXES

NOTE–I - FEDERAL INCOME TAXES

The provision for income taxes consists of the following:

(Dollars in thousands)	Year Ended December 31,
	2011			2010			2009
Income Taxes:
Federal current expense (benefit)	$	7		$	(299	)	$	(3,924	)
Federal deferred expense (benefit)		(292	)		(5,038	)		(2,373	)
Valuation allowance		829			5,855			—
Total Income Tax (Benefit)	$	544		$	518		$	(6,297	)

A reconciliation of the rate of taxes which are payable at the federal statutory rate are summarized as follows:

(Dollars in thousands)	2011			2010			2009
Federal income taxes computed at the expected statutory rate	$	257		$	(4,774	)	$	(5,955	)
Increase (decrease) in taxes resulting from:
Nontaxable dividend and interest income		(37	)		(21	)		(10	)
Increase in cash surrender value of life insurance – net		(249	)		(209	)		(258	)
Valuation allowance for deferred tax assets		829			5,855			—
Surrender of bank owned life insurance & penalty		72			70			452
Other		(328	)		(403	)		(526	)
Federal income tax provision per consolidated financial statements	$	544		$	518		$	(6,297	)

The components of the Corporation’s net deferred tax liability at December 31 are as follows:

Taxes (payable) refundable on temporary

differences at statutory rate:

	2011			2010
	(In thousands)
Deferred tax assets:
General loan loss allowance	$	4,941		$	5,736
Deferred loan fees		301			316
Deferred compensation		1,059			1,097
Other assets		533			877
Non-accrual interest		201			350
Unrealized loss on securities designated as available for sale		7			—
Tax credits and low income housing credits		1,739			1,342
NOL carryforward		2,443			4,506
Total deferred tax assets		11,224			14,224
Deferred tax liabilities:
FHLB stock dividends	$	(1,660	)	$	(5,017	)
Mortgage servicing rights		(1,109	)		(1,306	)
Book versus tax depreciation		(887	)		(771	)
Original issue discount		(755	)		(583	)
Unrealized gains on securities designated as available for sale		—			(530	)
Purchase price adjustments		(129	)		(162	)
Total deferred tax liabilities		(4,540	)		(8,369	)
Valuation Allowance	$	(6,684	)	$	(5,855	)
Net deferred tax asset (liability)	$	—		$	—

Camco is currently in process of an Internal Revenue Service audit for tax year 2009. The Corporation does not expect any changes to its tax positions as a result of the audit.

At December 31, 2011, the Corporation has a $7.2 million net operating loss carry forward available to reduce future income taxes through 2030. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the reversal of deferred tax assets and liabilities (including the impact of carryforward periods), projected future taxable income and tax-planning strategies in making this assessment. Based upon the Corporation’s cumulative three year loss position and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is likely that the Corporation will be able to realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could change in the near term if estimates of future taxable income during the carryforward period change.

For years prior to 1996, the Bank was allowed a special bad debt deduction generally limited to 8% of otherwise taxable income, subject to certain limitations based on aggregate loans and savings account balances at the end of the year. If the amounts that qualified as deductions for federal income taxes are later used for purposes other than for bad debt losses, including distributions in liquidation, such distributions will be subject to federal income taxes at the then current corporate income tax rate. The bad debt deduction had accumulated to approximately $12.1 million as of December 31, 2011. The amount of the unrecognized deferred tax liability relating to the cumulative bad debt deduction was approximately $4.1 million at December 31, 2011.