Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

14. Income Taxes

The Corporation and the Bank file a consolidated federal income tax return. The provision for income taxes for the years ended December 31 is comprised of the following:

(Dollar amounts in thousands)	2012			2011
Current	$	1,435		$	838
Deferred		(501	)		112
	$	934		$	950

A reconciliation between the provision for income taxes and the amount computed by multiplying operating results before income taxes by the statutory federal income tax rate of 34% for the years ended December 31 is as follows:

(Dollar amounts in thousands)	2012						2011
				% Pre-tax						% Pre-tax
	Amount			Income			Amount			Income
Provision at statutory tax rate	$	1,560			34.0	%	$	1,626			34.0	%
Increase (decrease) resulting from:
Tax free interest, net of disallowance		(563	)		(12.3	)%		(552	)		(11.5	)%
Earnings on BOLI		(89	)		(1.9	)%		(72	)		(1.5	)%
Other, net		26			0.6	%		(52	)		(1.1	)%
Provision	$	934			20.4	%	$	950			19.9	%

The tax effects of temporary differences between the financial reporting basis and income tax basis of assets and liabilities that are included in the net deferred tax asset or liability as of December 31 relate to the following:

(Dollar amounts in thousands)	2012		2011
Deferred tax assets:
Allowance for loan losses	$	1,682	$	1,046
Funded status of pension plan		925		785
Deferred compensation		278		213
Nonaccrual loan interest income		154		122
Securities impairment		149		226
Stock compensation		139		132
Other		28		72
Gross deferred tax assets		3,355		2,596
Deferred tax liabilities:
Net unrealized gains on securities		1,219		1,518
Depreciation		593		618
Accrued pension liability		298		190
Intangible assets		247		204
Deferred loan fees		99		79
Other		49		77
Gross deferred tax liabilities		2,505		2,686
Net deferred tax asset (liability)	$	850	$	(90	)

In accordance with relevant accounting guidance, the Corporation determined that it was not required to establish a valuation allowance for deferred tax assets since it is more likely than not that the deferred tax asset will be realized through carry-back to taxable income in prior years, future reversals of existing taxable temporary differences, tax strategies and, to a lesser extent, future taxable income. The Corporation’s net deferred tax asset or liability is recorded in the consolidated financial statements as a component of other assets or other liabilities.

At December 31, 2012 and December 31, 2011, the Corporation had no unrecognized tax benefits recorded. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase within the next twelve months. The Corporation recognizes interest and penalties on unrecognized tax benefits in income taxes expense in its Consolidated Statements of Income.

The Corporation and the Bank are subject to U.S. federal income tax as well as a capital-based franchise tax in the Commonwealth of Pennsylvania. The Corporation and the Bank are no longer subject to examination by taxing authorities for years before 2009.