INCOME TAXES

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

7. Income Taxes

Total income taxes for the years ended December 31, 2014, 2013 and 2012 are as follows:

	YEARS ENDED DECEMBER 31,
	2014		2013			2012
Income tax expense	$	1,997,866	$	1,829,807		$	1,604,250
Unrealized gains (losses) on securities available for sale presented in accumulated other comprehensive income (loss)		168,627		(730,715	)		109,467
Total	$	2,166,493	$	1,099,092		$	1,713,717

Income tax expense attributable to income before income tax expense consists of:

	YEAR ENDED DECEMBER 31,
	2014
	Current		Deferred		Total
U.S. Federal	$	1,703,444	$	94,061	$	1,797,505
State and local		200,361		—		200,361
	$	1,903,805	$	94,061	$	1,997,866

	YEAR ENDED DECEMBER 31,
	2013
	Current		Deferred		Total
U.S. Federal	$	1,584,131	$	59,829	$	1,643,960
State and local		185,847		—		185,847
	$	1,769,978	$	59,829	$	1,829,807

	YEAR ENDED DECEMBER 31,
			2012
	Current		Deferred			Total
U.S. Federal	$	1,619,265	$	(183,607	)	$	1,435,658
State and local		168,592		—			168,592
	$	1,787,857	$	(183,607	)	$	1,604,250

Income tax expense attributable to income before income tax expense was $1,997,866, $1,829,807, and $1,604,250 for the years ended December 31, 2014, 2013 and 2012, respectively, and differed from amounts computed by applying the U.S. federal income tax rate of 34% to pretax income from continuing operations as a result of the following:

	YEARS ENDED
	DECEMBER 31,
	2014			2013			2012
Computed “expected” tax expense	$	2,174,873		$	2,008,289		$	1,792,167
Increase (reduction) in income taxes Resulting from:
Tax exempt interest income		(357,834	)		(343,189	)		(338,592	)
State income tax, net of federal benefit		132,238			122,659			111,271
Other, net		48,589			42,048			39,404
	$	1,997,866		$	1,829,807		$	1,604,250

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2014 and 2013 are presented below:

	DECEMBER 31,
	2014			2013
Deferred tax assets:
State Net Operating Loss Carryforward	$	34,924		$	35,673
Allowance for loan losses		997,054			1,050,623
Other		20,997			66,588
Total gross deferred tax assets		1,052,975			1,152,884
Less valuation allowance		(34,924	)		(35,673	)
Net deferred tax assets		1,018,051			1,117,211
Deferred tax liabilities:
Prepaid expenses		(7,018	)		(15,780	)
Unrealized gain on securities
available for sale		(730,029	)		(561,402	)
Deferred loan fees		(30,410	)		(22,538	)
Fixed assets, principally due to
differences in depreciation		(14,810	)		(36,726	)
Other bond accretion		(48,030	)		(30,324	)
Total gross deferred tax liabilities		(830,297	)		(666,770	)
Net deferred tax asset	$	187,754		$	450,441

The Company analyzed the tax positions taken in its tax returns and concluded it has no liability related to uncertain tax positions.

There was a $34,924 valuation allowance for deferred tax assets at December 31, 2014 and $35,673 at December 31, 2013 associated with the Company’s state net operating loss. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and prior to their expiration governed by the income tax code. 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 during which the deferred income tax assets are expected to be deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences, net of the existing valuation allowance at December 31, 2014. The amount of the deferred income tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

Tax returns for 2011 and subsequent years are subject to examination by taxing authorities.