INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2014

The components of the provision (benefit) for income taxes are as follows:

	2014		2013		2012
Current	$	3,775	$	5,509	$	5,105
Deferred		3,395		1,895		568
Change in valuation allowance		-		-		-
Provision for income taxes	$	7,170	$	7,404	$	5,673

The Company’s deferred tax assets and liabilities at December 31 are shown below.

	2014			2013
Deferred tax assets
Allowance for loan losses	$	3,706		$	4,016
Purchase accounting adjustments		1,289			2,611
Net operating loss carryforward		648			1,048
Write-downs of other real estate owned		881			893
Taxable income on non-accrual loans		1,233			2,053
Capital loss carryforward		150			196
Accrued expenses		136			172
Unrealized loss on investment securities		-			322
Other		19			19
Total deferred tax assets		8,062			11,330

Deferred tax liabilities
Amortization of intangibles	$	(4,651	)	$	(4,615	)
Depreciation		(1,078	)		(1,101	)
Federal Home Loan Bank dividends		(349	)		(377	)
Deferred loan fees		(619	)		(567	)
Unrealized gain on investment securities		(770	)		-
Other		(72	)		(71	)
Total deferred tax liabilities		(7,539	)		(6,731	)

Valuation allowance on deferred tax assets		(160	)		(160	)
Net deferred taxes	$	363		$	4,439

An analysis of the differences between the effective tax rates and the statutory U.S. federal income tax rate is as follows:

	2014					2013					2012
U.S. federal income tax rate	$	6,909		34.0	%	$	7,015		34.0	%	$	5,439		34.0	%
Changes from the statutory rate
Impact of graduated federal tax rate		19		0.1			72		0.4			26		0.2
State income taxes, net		335		1.6			439		2.1			376		2.4
Tax-exempt interest income		(175	)	(0.9	)		(149	)	(0.7	)		(173	)	(1.1	)
Non-deductible interest expense related to carrying tax-exempt interest earning assets		12		0.1			9		0.0			12		0.1
Non-deductible stock compensation expense		55		0.3			57		0.3			62		0.4
Tax credits, net		(49	)	(0.2	)		(49	)	(0.2	)		(49	)	(0.3	)
Other		64		0.3			10		0.0			(20	)	(0.2	)
	$	7,170		35.3	%	$	7,404		35.9	%	$	5,673		35.5	%