INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2014

INCOME TAXES [Abstract]

Schedule of Income Tax Reconciliation

FEDERAL INCOME TAX SUMMARY  
(DOLLARS IN THOUSANDS)

	Year Ended December 31,
	2014						2013						2012
	$			%			$			%			$			%
Income tax at statutory rate		2,937			34			3,132			34.0			3,039			34.0
Tax-exempt interest income		(1,266	)		(14.7	)		(1,498	)		(16.3	)		(1,511	)		(16.9	)
Non-deductible interest expense		49			0.6			61			0.7			67			0.7
Bank-owned life insurance		(218	)		(2.5	)		(217	)		(2.3	)		(315	)		(3.5	)
Other		44			0.5			23			0.2			15			0.2	)
Income tax expense		1,546			17.9			1,501			16.3			1,295			14.5

Schedule of Components of Income Tax Expense

Significant components of income tax expense are as follows:        

(DOLLARS IN THOUSANDS)

	Year Ended December 31,
	2014			2013			2012
	$			$			$
Current tax expense		1,032			1,671			814
Deferred tax expense (benefit)		531			(174	)		607
Valuation allowance adjustment		(17	)		4			(126	)
Income tax expense		1,546			1,501			1,295

Schedule of Deferred Tax Assets and Liabilities

Components of the Corporation's net deferred tax position are as follows:  

(DOLLARS IN THOUSANDS)

	December 31,
	2014			2013			2012
	$			$			$
Deferred tax assets
Allowance for loan losses		2,428			2,454			2,555
Net unrealized holding losses on securities available for sale		—			2,030			—
Deferred compensation reserve		199			248			299
Capital loss carryforward		25			42			37
Other than temporary impairment		—			106			417
Tax credit carryforward		996			1,137			1,123
Charitable contribution carryforward		—			—			49
Allowance for off-balance sheet extensions of credit		105			148			124
Interest on non-accrual loans		170			164			136
Other		6			305			3
Total deferred tax assets		3,929			6,634			4,743
Valuation allowance		(25	)		(42	)		(37	)
Net deferred taxes		3,904			6,592			4,706
Deferred tax liabilities
Premises and equipment		(1,536	)		(1,388	)		(1,582	)
Net unrealized holding gains on securities available for sale		(516	)		—	)		(3,432	)
Discount on investment securities		(1	)		(61	)		(74	)
Credit losses on impaired securities		—			(228	)		(256	)
Other		(13	)		—	)		(83
Total deferred tax liabilities		(2,066	)		(1,677	)		(5,427	)
Net deferred tax assets (liabilities)		1,838			4,915			(721