Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

INCOME TAXES

NOTE 14—INCOME TAXES

The provision for income taxes (credit) consists of the following:

	2012		2011			2010
Current expense	$	2,042	$	2,925		$	3,332
Deferred expense (benefit)		1,013		(385	)		(788	)
TOTALS	$	3,055	$	2,540		$	2,544

Effective tax rates differ from federal statutory rate of 35% applied to income before income taxes due to the following:

	2012			2011			2010
Statutory tax	$	4,545		$	4,115		$	4,037
Effect of nontaxable interest		(1,203	)		(1,198	)		(1,062	)
Bank owned life insurance, net		(179	)		(183	)		(158	)
Effect of nontaxable life insurance death proceeds		0			(16	)		(179	)
Other		(108	)		(178	)		(94	)
ACTUAL TAX	$	3,055		$	2,540		$	2,544

Deferred tax assets (liabilities) are comprised of the following:

	2012		2011
Deferred tax assets:
Allowance for credit losses	$	2,670	$	3,437
Security valuation		1,772		1,775
Deferred and accrued compensation		516		457
Deferred loan fees and costs		455		461
Capital loss carryover		15		11
Post-retirement benefits		132		165
Other		259		234
Gross deferred tax assets	$	5,819	$	6,540
Deferred tax liabilities:
Depreciation		($1,089)		($781)
Net unrealized gain on securities available for sale		(4,073)		(4,336)
Federal Home Loan Bank dividends		(482)		(482)
Prepaid expenditures		(79)		(67)
Other		(22)		(5)
Gross deferred tax liabilities		(5,745)		(5,671)
NET DEFERRED TAX ASSET	$	74	$	869

No valuation allowance for deferred tax assets was recorded at December 31, 2012 and 2011. $33 thousand of the capital loss carryover, which can be used to offset future capital gain income, expires on December 31, 2013. The remaining $9 thousand expires on December 31, 2017.

At December 31, 2012 and December 31, 2011, 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.

There were no penalties or interest recorded in the income statement for the years ended December 31, 2012, 2011 and 2010 and no amounts accrued for penalties or interest as of December 31, 2012 and 2011.

The Company is subject to U.S. federal income tax. The Company is no longer subject to examination by the federal taxing authority for years prior to 2009. The tax years 2009—2011 remain open to examination by the U.S. taxing authority.