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Note 12 - Income Taxes
 12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Text Block]
12.     INCOME TAXES

The provision (benefit) for federal income taxes consists of:

(Dollar amounts in thousands)
 
2012
   
2011
   
2010
 
                   
Current payable
  $ 1,660     $ 693     $ 689  
Deferred
    2       (97 )     (777 )
                         
Total provision (benefit)
  $ 1,662     $ 596     $ (88 )

The tax effects of deductible and taxable temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

(Dollar amounts in thousands)
 
2012
   
2011
 
             
Deferred tax assets:
           
Allowance for loan losses
  $ 2,645     $ 2,318  
Supplemental retirement plan
    218       182  
Alternative minimum tax credits
    -       551  
Investment security basis adjustment
    66       66  
Nonaccrual interest income
    508       298  
Deferred origination fees, net
    189       105  
OREO adjustments
    116       -  
Net operating losses
    86       190  
Other
    47       125  
Gross deferred tax assets
    3,875       3,835  
                 
Deferred tax liabilities:
               
Premises and equipment
    434       405  
Net unrealized gain on securities
    2,777       2,339  
FHLB stock dividends
    225       225  
Intangibles
    256       208  
Other
    2       37  
Gross deferred tax liabilities
    3,694       3,214  
                 
Net deferred tax assets
  $ 181     $ 621  

No valuation allowance was established at December 31, 2012 and 2011, in view of the Company’s ability to carry-back to taxes paid in previous years and certain tax strategies, coupled with the anticipated future taxable income as evidenced by the Company's earnings potential.

The reconciliation between the federal statutory rate and the Company’s effective consolidated income tax rate is as follows:

(Dollar amounts in thousands)
 
2012
   
2011
   
2010
 
   
Amount
   
% of
Pretax
Income
   
Amount
   
% of
Pretax
Income
   
Amount
   
% of
Pretax
Income
 
                                     
                                     
Provision at statutory rate
  $ 2,700       34.0 %   $ 1,606       34.0 %   $ 827       34.0 %
Tax-free income
    (1,095 )     -13.8       (1,071 )     -22.7       (993 )     -40.9  
Nondeductible interest expense
    48       0.6       61       1.3       76       3.1  
Other
    9       0.1       -       0.0       2       0.2  
                                                 
                                                 
Actual tax expense and effective rate
  $ 1,662       20.9 %   $ 596       12.6 %   $ (88 )     (3.6 ) %

There is a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement.  Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.

At December 31, 2012 and December 31, 2011, the Company had no unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next 12 months. The Company recognizes interest and penalties on unrecognized tax benefits as a component of income tax expense.

The Company and the Banks are subject to U.S. federal income tax as well as an income tax in the state of Ohio, and the Banks are subject to a capital-based franchise tax in the state of Ohio. The Company and the Banks are no longer subject to examination by taxing authorities for years before December 31, 2009.