INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2014

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):

		2014			2013		2012
Current:	Federal	$	5,208		$	135	$	(4,126	)
	State		223			510		280
			5,431			645		(3,846	)
Deferred:	Federal		(885	)		3,046		1,412
	State		(747	)		31		1,162
			(1,632	)		3,077		2,574
Valuation allowance			(79	)		-		558
Total		$	3,720		$	3,722	$	(714	)

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:

	2014			2013			2012
Federal income tax expense (benefit) at statutory rates		35	%		34	%		(34	)%
Surtax exemption		(1	)		-			-
Tax-exempt income		(14	)		(14	)		(82	)
State income taxes, net of federal benefit		1			2			26
Deferred tax asset adjustment		(2	)		-			62
Other		1			1			(1	)
Total		20	%		23	%		(29	)%

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):

	2014			2013			2012
Deferred tax assets:
Allowance for loan losses	$	7,576		$	6,269		$	6,458
Post-retirement benefits		-			-			571
Deferred compensation		1,652			1,588			1,642
Stock-based compensation		459			668			458
Unrealized losses on securities available for sale		-			2,336			-
Realized losses on securities reclassed from available for sale to held to maturity		1,180			-			-
Unfunded pension obligation		2,496			94			2,826
Alternative Minimum Tax credit		3,925			668			537
Net operating loss carryforward		1,169			2,864			5,277
Other		992			961			1,300
Total deferred tax assets		19,449			15,448			19,069
Deferred tax liabilities:
Unrealized gains on securities available for sale		(1,724	)		-			(6,019	)
Other		(842	)		(961	)		(1,107	)
Total deferred tax liabilities		(2,566	)		(961	)		(7,126	)
Valuation allowance		(1,169	)		(534	)		(558	)
Net deferred tax asset	$	15,714		$	13,953		$	11,385

Schedule of changes in unrecognized tax benefits

The Company had unrecognized tax benefits of approximately $34 thousand at December 31, 2014, 2013 and 2012. Changes in unrecognized tax benefits consist of the following (in thousands):

	2014		2013		2012
Balance January 1	$	34	$	34	$	38
Additions from current year tax positions		-		-		1
Reductions for prior year tax positions		-		-		(5	)
Balance December 31	$	34	$	34	$	34