FEDERAL INCOME TAXES

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

FEDERAL INCOME TAXES

NOTE 12 - FEDERAL INCOME TAXES

Federal income taxes consisted of the following components:

		2013		2012		2011
Income tax/(benefit)
Currently payable	$	7,680	$	7,275	$	7,445
Deferred		375		(152)		(536)
	$	8,055	$	7,123	$	6,909

The following is a reconciliation of income tax expense and the amount computed by applying the effective federal income tax rate of 35% to income before income taxes:

		2013		2012		2011
Statutory rate applied to income before income taxes	$	9,737	$	8,844	$	8,189
Tax exempt income		(794)		(903)		(785)
Company owned life insurance income		(399)		(407)		(393)
Incentive stock options		17		34		71
Non qualified options expired		162		-		-
Low-income housing tax credit		(557)		(547)		(248)
Other		(111)		102		75
	$	8,055	$	7,123	$	6,909

Year-end deferred tax assets and liabilities were due to the following factors:

		2013		2012
Deferred tax assets from:
Allowance for loan losses	$	5,707	$	5,799
Benefit plans		2,142		1,749
Premises and equipment		775		828
Net operating loss carryforward		2,832		3,131
Acquisition intangibles		360		430
Net unrealized loss on available for sale securities		916		-
Other		634		675
		13,366		12,612
Deferred tax liabilities for:
FHLB stock dividends		(966)		(966)
Acquisition intangibles		(3,035)		(2,776)
Net unrealized gain on available for sale securities		-		(2,023)
Other		(6)		(52)
		(4,007)		(5,817)
Net deferred tax asset	$	9,359	$

At year-end 2013, the Company had net operating loss carry forwards from its 2007 acquisition of approximately $8,090, which expire beginning in 2022 and have an annual limitation by IRC section 382. No valuation allowance has been established as management believes it will generate sufficient income in future years to realize the net operating loss benefits before expiration.

The Company had no unrecognized tax benefits as of January 1, 2013 and 2012 and did not recognize any increase in unrecognized benefits during 2013 or 2012 relative to any tax positions taken in 2013 and 2012. Should the accrual of any interest or penalties relative to unrecognized tax benefits be necessary, it is the Company’s policy to record such accruals in its income taxes accounts; no such accruals exist as of December 31, 2013 and 2012. The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months.   The Company and its corporate subsidiary file a consolidated U.S. federal income tax return, which is subject to examination for all years after 2010.