INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

INCOME TAXES

Schedule of components of the federal income tax provision (credit)

The components of the federal income tax provision (credit) for the years ended December 31 are as follows (dollars in thousands):

	2012			2011		2010
Current tax expense (benefit)	$	—		$	314	$	—
Change in valuation allowance	(3,000		)	—		(2,136		)
Deferred tax expense (benefit)	2,078			784		(1,364		)
Provision for (benefit of) income taxes	$	(922	)	$	1,098	$	(3,500	)

Summary of the source of differences between income taxes at the federal statutory rate and the provision (credit) for income taxes

A summary of the source of differences between income taxes at the federal statutory rate and the provision (credit) for income taxes for the years ended December 31 is as follows (dollars in thousands):

	2012			2011			2010
Tax expense at statutory rate	$	2,096		$	1,127		$	(1,332	)
Increase (decrease) in taxes resulting from:
Tax-exempt interest	(49		)	(59		)	(73		)
Change in valuation allowance	(3,000		)	—			(2,136		)
Other	31			30			41
Provision for (benefit of) income taxes, as reported	$	(922	)	$	1,098		$	(3,500	)

Schedule of major components of net deferred tax assets

Deferred income taxes are provided for the temporary differences between the financial reporting and tax bases of the Corporation’s assets and liabilities. The major components of net deferred tax assets at December 31 are as follows (dollars in thousands):

	2012			2011
Deferred tax assets:
NOL carryforward	$	7,149		$	9,073
Allowance for loan losses	1,774			1,785
Alternative Minimum Tax Credit	1,463			1,463
OREO Tax basis > book basis	1,025			1,050
Tax credit carryovers	672			672
Deferred compensation	185			217
Stock compensation	265			172
Depreciation	174			225
Intangible assets	60			77
Other	170			110
Total deferred tax assets	12,937			14,844
Valuation allowance	$	(3,010	)	$	(6,010	)
Deferred tax liabilities:
FHLB stock dividend	(103		)	(103		)
Unrealized gain on securities	(476		)	(168		)
Mortgage servicing rights	(217		)	(136		)
Total deferred tax liabilities	(796		)	(407		)
Net deferred tax asset	$	9,131		$	8,427