Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of components of income tax (benefit) provision

The following table presents the benefit for income taxes in the consolidated statements of operations which is comprised of the following: (in thousands)

		2012			2011			2010
Current:	Federal	$	(4,126	)	$	751		$	5,043
	State		280			345			848
			(3,846	)		1,096			5,891
Deferred:	Federal		1,412			(4,339	)		(5,691	)
	State		1,162			(980	)		(1,505	)
			2,574			(5,319	)		(7,196	)
Valuation allowance			558			-			-
Total		$	(714	)	$	(4,223	)	$	(1,305	)

Schedule of effective income tax rate reconciliation

The total tax (benefit) expense was different from the amounts computed by applying the federal income tax rate because of the following:

	2012			2011			2010
Federal income tax (benefit) expense at statutory rates		(34	) %		(35	) %		35	%
Tax-exempt interest		(82	)		(56	)		(55	)
State income taxes net of federal benefit		26			(10	)		(8	)
Decrease in deferred tax assets related to tax rates		62			-			-
Other		(1	)		3			2
Total		(29	) %		(98	) %		(26	) %

Schedule of deferred tax assets and liabilities

The effects of temporary differences between tax and financial accounting that create significant deferred tax assets and liabilities, and the recognition of income and expense for purposes of tax and financial reporting, are presented below: (in thousands)

	2012			2011			2010
Deferred tax assets:
Allowance for possible loan losses	$	6,458		$	15,835		$	11,520
Post-retirement benefits		571			551			519
Deferred compensation		1,642			1,941			2,001
Unfunded pension obligation		2,826			7,396			2,299
Alternative Minimum Tax credit carryforward		537			-			-
Net operating loss carryforward		5,277			-			-
Other		1,758			2,003			1,839
Total deferred tax assets before valuation allowance		19,069			27,726			18,178
Valuation allowance		(558	)		-			-
Total deferred tax assets net of valuation allowance		18,511			27,726			18,178
Deferred tax liabilities:
Securities available for sale		(6,019	)		(7,692	)		(4,975	)
Other		(1,107	)		(1,569	)		(1,076	)
Total deferred tax liabilities		(7,126	)		(9,261	)		(6,051	)
Net deferred tax asset	$	11,385		$	18,465		$	12,127

Schedule of Changes in unrecognized tax benefits

The Company had unrecognized tax benefits including interest of approximately $34 thousand, $38 thousand and $41 thousand at December 31, 2012, 2011 and 2010, respectively. Changes in unrecognized tax benefits consist of the following: (in thousands)

	2012			2011			2010
Balance January 1	$	38		$	41		$	50
Additions from current year tax positions		1			-			-
Reductions for prior year tax positions		(5	)		(3	)		(9	)
Balance December 31	$	34		$	38		$	41