INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of components of income tax (benefit) provision

The following table presents the expense (benefit) for income taxes in the consolidated statements of operations which is comprised of the following (in thousands):

		2013		2012			2011
Current:	Federal	$	135	$	(4,126	)	$	751
	State		510		280			345
			645		(3,846	)		1,096
Deferred:	Federal		3,046		1,412			(4,339	)
	State		31		1,162			(980	)
			3,077		2,574			(5,319	)
Valuation allowance			-		558			-
Total		$	3,722	$	(714	)	$	(4,223	)

Schedule of effective income tax rate reconciliation

The total tax expense (benefit) was different from the amounts computed by applying the federal income tax rate because of the following:

	2013			2012			2011
Federal income tax expense (benefit)at statutory rates		34	%		(34	)%		(35	)%
Tax-exempt income		(14	)		(82	)		(56	)
State income taxes, net of federal benefit		2			26			(10	)
Deferred tax asset adjustment		-			62			-
Other		1			(1	)		3
Total		23	%		(29	)%		(98	)%

Schedule of deferred tax assets and liabilities

The effects of temporary differences between tax and financial accounting that create significant deferred tax assets and liabilities and the recognition of income and expense for purposes of tax and financial reporting are presented below (in thousands):

	2013			2012			2011
Deferred tax assets:
Allowance for loan losses	$	6,269		$	6,458		$	15,835
Post-retirement benefits		-			571			551
Deferred compensation		1,588			1,642			1,941
Stock-based compensation		668			458			326
Unrealized losses on securities available for sale		2,336			-			-
Unfunded pension obligation		94			2,826			7,396
Alternative Minimum Tax credit		668			537			-
Net operating loss carryforward		2,864			5,277			-
Other		961			1,300			1,677
Total deferred tax assets		15,448			19,069			27,726
Deferred tax liabilities:
Unrealized gains on securities available for sale		-			(6,019	)		(7,692	)
Other		(961	)		(1,107	)		(1,569	)
Total deferred tax liabilities		(961	)		(7,126	)		(9,261	)
Valuation allowance		(534	)		(558	)		-
Net deferred tax asset	$	13,953		$	11,385		$	18,465

Schedule of Changes in unrecognized tax benefits

Changes in unrecognized tax benefits consist of the following (in thousands):

	2013		2012			2011
Balance January 1	$	34	$	38		$	41
Additions from current year tax positions		-		1			-
Reductions for prior year tax positions		-		(5	)		(3	)
Balance December 31	$	34	$	34		$	38