Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes

Income Taxes

NOTE 17 Income Taxes

The components of the provision for income taxes are as follows:

	2012		2011			2010
Current income tax provision:
Federal	$	1,600	$	1,915		$	1,688
State		535		606			600
Total current		2,135		2,521			2,288
Deferred income tax provision (benefit):
Federal		330		(60	)		(220	)
State		70		(40	)		(80	)
Total deferred		400		(100	)		(300	)
Total provision for income taxes	$	2,535	$	2,421		$	1,988

A summary of the source of differences between income taxes at the federal statutory rate and the provision for income taxes for the years ended December 31, follows:

	2012						2011						2010
				Percent						Percent						Percent
				of						of						of
				Pretax						Pretax						Pretax
	Amount			Income			Amount			Income			Amount			Income
Tax expense at statutory rate	$	2,905			34.0		$	2,627			34.0		$	2,292			34.0
Increase (decrease)in taxes resulting from:
Tax-exempt interest		(778	)		(9.1	)		(480	)		(6.2	)		(527	)		(7.8	)
Bank-owned life insurance		(138	)		(1.6	)		(141	)		(1.8	)		(139	)		(2.1	)
State income tax		399			4.7			374			4.8			343			5.1
Merger-related expenses		73			1.0			0			0.0			0			0.0
Other		74			1.0			41			0.5			19			0.3
Provision for income taxes	$	2,535			30.0		$	2,421			31.3		$	1,988			29.5

Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of PSB’s assets and liabilities. The major components of the net deferred tax assets are as follows:

	2012		2011
Deferred tax assets:
Allowance for loan losses	$	2,821	$	3,129
Deferred compensation and directors’ fees		1,189		971
Investment securities		13		26
Loans receivable		47		0
Deposits		23		0
Accrued interest receivable		125		89
Foreclosed assets		228		543
Interest rate swaps		273		225
Other		58		40
Gross deferred tax assets		4,777		5,023
Deferred tax liabilities:
Premises and equipment		864		669
Mortgage servicing rights		521		475
FHLB stock		240		326
Unrealized gain on securities available for sale		1,190		1,488
Deferred net loan origination costs		98		85
Prepaid expenses		181		243
Gross deferred tax liabilities		3,094		3,286
Net deferred tax asset	$	1,683	$	1,737

At December 31, 2012, federal tax returns remained open for Internal Revenue Service (IRS) review for tax years after 2008, while state tax returns remain open for review by state taxing authorities for tax years after 2007. There were no federal or state income tax audits being conducted at December 31, 2012.

The following table presents income tax effects on items of comprehensive income (loss) for the years ended December 31:

	2012						2011						2010
	Pretax			Income Tax			Pretax			Income Tax			Pretax			Income Tax
	Inc.(Exp.)			Exp.(Credit)			Inc.(Exp.)			Exp.(Credit)			Inc.(Exp.)			Exp.(Credit)
Unrealized gain (loss) on securities
available for sale	($	310	)	($	119	)	$	180		$	71		$	1,398		$	551
Reclassification adjustment for net
security (gain) loss included in net income		0			0			(32	)		(13	)		20			8
Amortization of unrealized gain on securities
available for sale transferred to securities
held to maturity included in net income		(452	)		(178	)		(516	)		(168	)		(152	)		(60	)
Unrealized loss on interest rate swap		(295	)		(116	)		(734	)		(287	)		(79	)		(31	)
Reclassification adjustment of interest rate
swap settlements included in earnings		172			68			183			72			54			21
Totals	($	885	)	($	345	)	($	919	)	($	325	)	$	1,241		$	489