INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2013

INCOME TAXES [Abstract]

Provision for income taxes (benefit)

The provision for income taxes consists of the following (in thousands):

	Year Ended December 31,
	2013	2012	2011
Currently payable	$          3,082	$          4,389	$          3,512
Deferred tax liability (asset)	670	(58)	98
Provision for income taxes	$          3,752	$          4,331	$          3,610

Deferred tax assets

The following temporary differences gave rise to the net deferred tax liabilities at December 31, 2013 and 2012 (in thousands):

	2013	2012
Deferred tax assets:
Allowance for loan losses	$          2,413	$          2,307
Deferred compensation	528	544
Merger & acquisition costs	29	34
Allowance for losses on available-for-sale securities	523	784
Pension and other retirement obligation	90	733
Unrealized loss on interest rate swap	-	68
Interest on non-accrual loans	793	720
Incentive plan accruals	330	323
Other real estate owned expenses	72	84
Unrealized losses on available-for-sale securities	55	-
Other	95	96
Total	$          4,928	$          5,693
Deferred tax liabilities:
Premises and equipment	$            (348)	$            (358)
Investment securities accretion	(310)	(302)
Loan fees and costs	(184)	(110)
Goodwill and core deposit intangibles	(2,431)	(2,126)
Low income housing tax credits	-	(20)
Mortgage servicing rights	(180)	(167)
Unrealized gains on available-for-sale securities	-	(3,480)
Total	(3,453)	(6,563)
Deferred tax (liability) asset, net	$          1,475	$            (870)

Reconciliation of statutory tax rates to effective tax rates

The total provision for income taxes is different from that computed at the statutory rates due to the following items (in thousands):

	Year Ended December 31,
	2013	2012	2011
Provision at statutory rates on
pre-tax income	$          5,823	$          6,306	$          5,590
Effect of tax-exempt income	(1,752)	(1,853)	(1,844)
Low income housing tax credits	(198)	(57)	(96)
Bank owned life insurance	(171)	(172)	(169)
Nondeductible interest	70	87	107
Other items	(20)	20	22
Provision for income taxes	$          3,752	$          4,331	$          3,610
Statutory tax rates	34%	34%	34%
Effective tax rates	21.9%	23.4%	22.0%