Income Taxes

12 Months Ended

Dec. 31, 2013

Income Taxes

Income Taxes

NOTE 17 Income Taxes

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

	2013			2012		2011
Current income tax provision:
Federal	$	1,246		$	1,600	$	1,915
State		450			535		606
Total current		1,696			2,135		2,521
Deferred income tax provision (benefit):
Federal		(132	)		330		(60	)
State		99			70		(40	)
Total deferred		(33	)		400		(100	)
Total provision for income taxes	$	1,663		$	2,535	$	2,421

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:

	2013						2012						2011
				Percent						Percent						Percent
				of						of						of
				Pretax						Pretax						Pretax
	Amount			Income			Amount			Income			Amount			Income
Tax expense at statutory rate	$	2,178			34.0		$	2,905			34.0		$	2,627			34.0
Increase (decrease) in taxes resulting from:
Tax-exempt interest		(703	)		(11.0	)		(778	)		(9.1	)		(480	)		(6.2	)
Bank-owned life insurance		(137	)		(2.1	)		(138	)		(1.6	)		(141	)		(1.8	)
State income tax		362			5.7			399			4.7			374			4.8
Merger-related expenses		0			0.0			73			1.0			0			0.0
Other		(37	)		(0.6	)		74			1.0			41			0.5
Provision for income taxes	$	1,663			26.0		$	2,535			30.0		$	2,421			31.3

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:

	2013		2012
Deferred tax assets:
Allowance for loan losses	$	2,579	$	2,821
Deferred compensation and directors’ fees		1,308		1,189
Accrued interest receivable		0		125
Foreclosed assets		352		228
Interest rate swaps		171		273
Other		223		141
Gross deferred tax assets		4,633		4,777
Deferred tax liabilities:
Premises and equipment		769		864
Mortgage servicing rights		673		521
FHLB stock		120		240
Unrealized gain on securities available for sale		400		1,190
Deferred net loan origination costs		128		98
Prepaid expenses		139		181
Gross deferred tax liabilities		2,229		3,094
Net deferred tax asset	$	2,404	$	1,683

At December 31, 2013, federal tax returns remained open for Internal Revenue Service (IRS) review for tax years after 2009, while state tax returns remain open for review by state taxing authorities for tax years after 2008. There were no federal or state income tax audits being conducted at December 31, 2013.

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

	2013						2012						2011
	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	($	1,574	)	($	613	)	($	310	)	($	119	)	$	180		$	71
Reclassification adjustment for net
security gain included in net income		(12	)		(5	)		0			0			(32	)		(13	)
Amortization of unrealized gain on securities
available for sale transferred to securities
held to maturity included in net income		(420	)		(184	)		(452	)		(178	)		(516	)		(168	)
Unrealized gain (loss) on interest rate swap		75			29			(295	)		(116	)		(734	)		(287	)
Reclassification adjustment of interest rate
swap settlements included in earnings		186			73			172			68			183			72
Totals	($	1,745	)	($	700	)	($	885	)	($	345	)	($	919	)	($	325	)