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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Taxes [Abstract] |
Income Taxes |
(9) | Income Taxes
The composition of income tax expense (benefit) for the years ended December 31, 2012, 2011, and 2010 are as follows:
(in thousands) |  | 2012 |  |  | 2011 |  |  | 2010 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 651 |  |  | $ | 374 |  |  | $ | (837 | )
State |  |  | 156 |  |  |  | (214 | ) |  |  | 80 |
Total current |  |  | 807 |  |  |  | 160 |  |  |  | (757 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (197 | ) |  |  | 386 |  |  |  | (2,091 | )
State |  |  | (64 | ) |  |  | 45 |  |  |  | (239 | )
Total deferred |  |  | (261 | ) |  |  | 431 |  |  |  | (2,330 | )
Total income tax expense (benefit) |  | $ | 546 |  |  | $ | 591 |  |  | $ | (3,087 | )
Applicable income tax (benefit) expense for financial reporting purposes differs from the amount computed by applying the statutory Federal income tax rate for the reasons noted in the table for the years ended December 31, 2012, 2011, and 2010 are as follows:
|  | 2012 |  |  | 2011 |  |  | 2010 |
(in thousands) |  | Amount |  |  | % |  |  | Amount |  |  | % |  |  | Amount |  |  | % |
Income (loss) before provision for income tax expense (benefit) |  | $ | 3,368 |  |  |  |  |  |  | $ | 3,448 |  |  |  |  |  |  | $ | (6,639 | ) |  |  |  |
Tax at statutory Federal income tax rate |  | $ | 1,145 |  |  |  | 34.00 | % |  | $ | 1,172 |  |  |  | 34.00 | % |  | $ | (2,257 | ) |  |  | 34.00 | %
Tax-exempt income |  |  | (380 | ) |  |  | (11.27 | ) |  |  | (404 | ) |  |  | (11.72 | ) |  |  | (445 | ) |  |  | 6.70 |
State income tax, net of Federal tax benefit |  |  | 61 |  |  |  | 1.81 |  |  |  | (111 | ) |  |  | (3.23 | ) |  |  | (105 | ) |  |  | 1.58 |
Release of prior year over accrual |  |  | (371 | ) |  |  | (11.01 | ) |  |  | 0 |  |  |  | 0.00 |  |  |  | 0 |  |  |  | 0.00 |
Other, net |  |  | 91 |  |  |  | 2.70 |  |  |  | (66 | ) |  |  | (1.91 | ) |  |  | (280 | ) |  |  | 4.22 |
Provision for income tax expense (benefit) |  | $ | 546 |  |  |  | 16.23 | % |  | $ | 591 |  |  |  | 17.14 | % |  | $ | (3,087 | ) |  |  | 46.50 | %
The components of deferred tax assets and deferred tax liabilities at December 31, 2012 and 2011 are as follows:
(in thousands) |  | 2012 |  |  | 2011 |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for loan losses |  | $ | 5,640 |  |  | $ | 5,248 |
Impairment of other real estate owned |  |  | 2,774 |  |  |  | 2,734 |
Goodwill |  |  | 2,483 |  |  |  | 2,831 |
Deferred taxes on pension |  |  | 997 |  |  |  | 1,380 |
Nonaccrual loan interest |  |  | 940 |  |  |  | 1,033 |
Core deposit intangible |  |  | 904 |  |  |  | 883 |
Pension |  |  | 450 |  |  |  | 276 |
Deferred compensation |  |  | 36 |  |  |  | 27 |
Other |  |  | 449 |  |  |  | 549 |
Total deferred tax assets |  | $ | 14,673 |  |  | $ | 14,961 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Available-for-sale securities |  | $ | 2,088 |  |  | $ | 2,177 |
Premises and equipment |  |  | 958 |  |  |  | 960 |
Mortgage servicing rights |  |  | 908 |  |  |  | 791 |
Assets held for sale |  |  | 110 |  |  |  | 109 |
FHLB stock dividend |  |  | 100 |  |  |  | 100 |
Other |  |  | 1 |  |  |  | 2 |
Total deferred tax liabilities |  |  | 4,165 |  |  |  | 4,139 |
Net deferred tax asset |  | $ | 10,508 |  |  | $ | 10,822 |
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these temporary differences at December 31, 2012 and, therefore, did not establish a valuation reserve. At December 31, 2012, the accumulation of prior years’ earnings representing tax bad debt deductions of the Bank was $2,931,503. If these tax bad debt reserves were charged for losses other than bad debt losses, the Bank would be required to recognize taxable income in the amount of the charge. It is not contemplated that such tax-restricted retained earnings will be used in a manner that would create federal income tax liabilities. The Company follows ASC Topic 740, Income Taxes, which addresses the accounting for uncertain tax positions. As a result of the lapse of the statue of limitations for the 2007 tax year, the Company recognized $340,351 of gross unrecognized tax benefits and $30,969 of accrued interest. This resulted in a decrease in the effective tax rate for the year ended December 31, 2011 compared to December 31, 2010. As of December 31, 2012 and 2011, respectively, the Company did not have any uncertain tax provisions. A reconciliation of the beginning and ending amount of the unrecognized tax benefits is as follows:
|  | 2012 |  |  | 2011 |  |  | 2010 |
Unrecognized tax benefits as of January 1, |  | $ | 0 |  |  | $ | 340,351 |  |  | $ | 562,076 |
Gross amounts of the increases and decreases in unrecognized tax benefits as a result of tax positions taken during prior years |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Gross amounts of the increases and decreases in unrecognized tax benefits as a result of tax positions taken during year |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
The amount of decreases in unrecognized tax benefits relating to settlements with taxing authorities |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Reductions to unrecognized benefits as a result of a lapse of the applicable statute of limitations |  |  | 0 |  |  |  | (340,351 | ) |  |  | (221,725 | )
Unrecognized tax benefits as of December 31, |  | $ | 0 |  |  | $ | 0 |  |  | $ | 340,351 |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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