INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2015

INCOME TAXES [Abstract]

Schedule of Components of Income Tax Expense

	For the years ended December 31,
(In thousands)	2015		2014
Income tax (benefit) expense
Current-federal	$	21	$	(654)
Current-state		16		—
Deferred		(5,176)		—
Income tax benefit	$	(5,139)	$	(654)

The income tax benefit for 2015 is largely due to the release of a portion of the valuation allowance against the net deferred tax assets (“DTA”)

Statutory Federal Income Tax Rate Reconciliation

	For the years ended December 31,
(In thousands)	2015		2014
Computed tax expense at statutory rate	$	2,169	$	1,645
Non-controlling interest		(205)		(186)
Alternative minimum tax ("AMT") expense		21		—
Fines and penalties		—		28
Stock options expense		20		71
Nondeductible expense		146		18
Bank owned life insurance		(169)		(174)
Capital loss carryover-expired		—		202
Charitable contributions carryover-expired		—		2
Refunds-prior year amended tax return filings		—		(654)
Federal net operating loss-KNBT*		1,368		—
State taxes (net of federal benefit)		8		—
Adjustment to prior year items		67		(3,584)
(Decrease) increase in valuation allowance		(8,564)		1,978
Income tax benefit	$	(5,139)	$	(654)

*KNBT: Knoblauch State Bank

Deferred Tax Assets and Liabilities

	As of December 31,
(In thousands)	2015		2014
Deferred tax assets
Allowance for loan and lease losses and unfunded loan commitments	$	2,699	$	3,544
Net operating loss carryforwards		22,546		23,801
Security writedowns		1,020		1,855
OREO writedowns		139		465
Investment in partnerships		1,698		2,046
Pension obligations		5,108		5,249
Unrealized losses on debt securities		165		—
Share-based compensation cost		83		77
Non-accrual interest		366		287
Capital loss carryovers		1,618		1,739
Charitable contribution carryovers		24		16
Employee bonuses		184		91
Accrued liabilities		181		163
Alternative minimum tax credit carryforward		302		282
Derivative instruments		189		—
Other		311		100
Total deferred tax assets before valuation allowance		36,633		39,715
Less valuation allowance		(30,573)		(39,137)
Deferred tax assets, net of valuation allowance		6,060		578
Deferred tax liabilities
Penalties on delinquent tax certificates		35		72
Unrealized gains on AFS debt securities		—		308
Unrealized gains on AFS equity securities		151		434
Prepaid deductions		43		17
Other		114		55
Total deferred tax liabilities		343		886
Net deferred tax (liability) asset, included in other assets	$	5,717	$	(308)