Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

INCOME TAXES

NOTE L – INCOME TAXES

Income tax provision (credit) consists of (in thousands):

	2011		2010		2009
Current	$	809	$	546	$	(427	)
Deferred		150		175		506
Totals	$	959	$	721	$	79

The deferred income tax provision consists of the tax effect of temporary differences, including a credit of $207,000 in 2010 and $23,000 in 2009 resulting from the utilization of net operating loss carryforwards.

Income tax provision calculated at the statutory federal income tax rate of 34% differs from actual income tax provision as follows (in thousands):

	2011			2010			2009
Income tax at statutory rate	$	1,483		$	1,298		$	685
Tax-exempt interest income, net		(311	)		(289	)		(351	)
Earnings on life insurance assets, including gain from proceeds in 2010		(118	)		(172	)		(122	)
Low income housing partnership tax credits		(127	)		(127	)		(127	)
Write-off capital loss carryforward		—			60			—
Change in valuation allowance		—			(54	)		—
Other items, net		32			5			(6	)
Totals	$	959		$	721		$	79

Deferred tax assets and liabilities consist of the following at December 31 (in thousands):

	2011			2010
Deferred tax assets:
Allowance for loan losses	$	1,134		$	1,150
Deferred compensation and supplemental retirement liability		769			765
Intangible asset amortization		—			12
Pension liability		170			135
Nonaccrual loan interest		252			245
Tax credit carryforwards		655			796
Stock based compensation		175			146
Other		157			127
Total deferred tax assets		3,312			3,376
Deferred tax liabilities:
Mortgage servicing rights		(329	)		(295	)
Goodwill		(211	)		(191	)
Purchase accounting adjustments		(646	)		(761	)
Net unrealized gain on available for sale securities		(465	)		(48	)
Depreciation		(296	)		(51	)
Other		(124	)		(257	)
Total deferred tax liabilities		(2,071	)		(1,603	)
Net deferred tax assets, included in other assets	$	1,241		$	1,773

At December 31, 2011, the Company has available alternative minimum tax credit carryforwards of $522,000, which may be utilized in the future to the extent computed regular tax exceeds the alternative minimum tax. The Company also has low income housing credit carryforwards of $133,000 at December 31, 2011, which will begin to expire in 2029 if not utilized.

The Company and its subsidiaries file U.S. federal and certain state tax returns. In general, tax returns are no longer subject to tax examinations by tax authorities for years before 2008. The Internal Revenue Service recently completed an examination of the Company’s 2009 federal tax return. The Company expects to pay approximately $284,000 of additional tax which will generate deferred tax assets of a similar amount, resulting in substantially no additional tax provision.

The Company believes that it had no uncertain tax positions as of December 31, 2011 and 2010.