Macatawa Bank Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

FEDERAL INCOME TAXES (Tables)

FEDERAL INCOME TAXES (Tables)

3 Months Ended

Mar. 31, 2014

Income tax expense was as follows (dollars in thousands):

	Three Months			Three Months
	Ended			Ended
	March 31,			March 31,
	2014			2013
Current		$	23		$	---
Deferred			1,154			1,142
		$	1,177		$	1,142

Difference between financial statement tax expense (benefit) and amount computed by applying statutory federal tax rate to pretax income

The difference between the financial statement tax expense and amount computed by applying the statutory federal tax rate to pretax income was reconciled as follows (dollars in thousands):

	Three Months				Three Months
	Ended				Ended
	March 31,				March 31,
	2014				2013
Statutory rate			35	%			35	%
Statutory rate applied to income before taxes		$	1,336			$	1,265
Add (deduct)
Tax-exempt interest income			(85	)			(46	)
Bank-owned life insurance			(54	)			(60	)
Other, net			(20	)			(17	)
		$	1,177			$	1,142

Deferred tax assets and liabilities

The net deferred tax asset recorded included the following amounts of deferred tax assets and liabilities (dollars in thousands):

	March 31,			December 31,
	2014			2013
Deferred tax assets
Allowance for loan losses	$	7,134		$	7,279
Nonaccrual loan interest		833			782
Valuation allowance on other real estate owned		5,257			5,847
Net operating loss carryforward		1,333			1,743
Unrealized loss on securities available for sale		656			1,053
Other		1,716			1,808
Gross deferred tax assets		16,929			18,512
Valuation allowance		---			---
Total net deferred tax assets		16,929			18,512

Deferred tax liabilities
Depreciation		(1,604	)		(1,620	)
Prepaid expenses		(308	)		(308	)
Other		(391	)		(384	)
Gross deferred tax liabilities		(2,303	)		(2,312	)
Net deferred tax asset	$	14,626		$	16,200