v2.4.0.6
FEDERAL INCOME TAXES
12 Months Ended
Dec. 31, 2011
FEDERAL INCOME TAXES

NOTE 14 - FEDERAL INCOME TAXES

 

Federal income taxes consisted of the following components:

 

    2011     2010     2009  
Income tax/(benefit)                        
Currently payable   $ 7,445     $ 5,300     $ 5,154  
Deferred     (536 )     (772 )     (2,007 )
                         
    $ 6,909     $ 4,528     $ 3,147  

 

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:

  

    2011     2010     2009  
Statutory rate applied to income before income taxes   $ 8,189     $ 5,669     $ 4,167  
Tax exempt income     (785 )     (668 )     (616 )
Company owned life insurance income     (393 )     (325 )     (313 )
Incentive stock options     71       107       150  
Low-income housing tax credit     (248 )     (249 )     (248 )
Other     75       (6 )     7  
                         
    $ 6,909     $ 4,528     $ 3,147  

 

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

 

    2011     2010  
Deferred tax assets from:                
Allowance for loan losses   $ 5,642     $ 5,136  
Benefit plans     1,312       1,062  
Premises and equipment     868       682  
Net operating loss carryforward     3,430       3,675  
Acquisition intangibles     485       511  
Other     491       304  
      12,228       11,370  
Deferred tax liabilities for:                
FHLB stock dividends     (966 )     (952 )
Acquisition intangibles     (2,534 )     (2,244 )
Net unrealized gain on available for sale securities     (1,706 )     (462 )
Other     (62 )     (44 )
      (5,268 )     (3,702 )
                 
Net deferred tax asset   $ 6,960     $ 7,668  

 

At year-end 2011, the Company had net operating loss carry forwards from its 2007 acquisition of approximately $9,799 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, 2011 and 2010 and did not recognize any increase in unrecognized benefits during 2011 or 2010 relative to any tax positions taken in 2011 and 2010. 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, 2011 and 2010. The Company and its corporate subsidiary file a consolidated U.S. federal income tax return, which is subject to examination for all years after 2007.