Income Taxes from Continuing Operations (Notes)

12 Months Ended

Dec. 31, 2011

Income Taxes from Continuing Operations [Abstract]

Income Taxes from Continuing Operations

Note 10. Income Taxes from Continuing Operations

The Company files income tax returns in the U.S. federal and various state jurisdictions.  Income tax returns for the years 2006 through 2011 remain open to examination by federal and state taxing authorities.  A federal examination for 2009 was completed with an adjustment to reported taxable income for certain other real estate owned expenses. The adjustment was all deductible in 2010, 2011 or future years.

During the years ended December 31, 2011, 2010, and 2009, the Company recognized no material interest or penalties.  No accrued interest or penalties are included in accrued tax expenses in the balance sheets as of December 31, 2011 and 2010.

The components of income tax expenses (benefits) related to continuing operations consisted of the following for the years ended December 31, 2011, 2010, and 2009.

	2011		2010		2009
Current:
Federal	$	4,441	$	4,036	$	(1,523	)
State	900		655		430
Deferred:
Federal	630		563		(5,544		)
State	101		76		(719		)
Income taxes (benefits)	$	6,072	$	5,330	$	(7,356	)

Total income tax expenses (benefits) for the years ended December 31, 2011, 2010, and 2009, differed from the amounts computed by applying the U.S. federal income tax rate of 35% to income (loss) before income taxes (benefits) as a result of the following:

	2011					2010					2009
	Amount			Percent of Pretax Income		Amount			Percent of Pretax Income		Amount			Percent of Pretax Loss
Computed expected tax
expense (benefit)	$	7,469		35.0	%	$	6,550		35.0	%	$	(4,342	)	(35.0	)%
State income tax expense (benefit),
net of federal income tax benefit	557			2.6		502			2.7		(440		)	(3.5	)
Tax-exempt interest income	(1,328		)	(6.2	)	(1,647		)	(8.8	)	(1,971		)	(15.9	)
Nondeductible interest expense
to own tax-exempts	54			0.3		90			0.5		148			1.2
Tax-exempt increase in cash value of
life insurance and gains	(532		)	(2.5	)	(452		)	(2.4	)	(565		)	(4.6	)
Capital loss carryover due to sale
of WB Capital	—			—		—			—		(3,296		)	(26.6	)
Valuation allowance	227			1.1		666			3.6		3,320			26.8
New market tax credit	(273		)	(1.3	)	(273		)	(1.5	)	(228		)	(1.8	)
Other, net	(102		)	(0.5	)	(106		)	(0.6	)	18			0.1
Income taxes (benefits)	$	6,072		28.5	%	$	5,330		28.5	%	$	(7,356	)	(59.3	)%

The tax effects of temporary differences that give rise to net deferred tax assets consist of the following as of December 31, 2011 and 2010.

	2011			2010
Deferred tax assets:
Allowance for loan losses	$	6,376		$	7,253
Net unrealized losses on securities available for sale	—			1,623
Investment security impairment	35			291
Intangibles	2,004			2,265
Other real estate owned	1,472			870
Accrued expenses	526			417
Alternative minimum tax credit	—			21
State net operating loss carryforward	442			381
Capital loss carryforward	4,125			3,703
Other	109			152
	15,089			16,976
Deferred tax liabilities:
Net deferred loan fees and costs	252			255
Net unrealized gains on securities available for sale	401			—
Premises and equipment	590			493
Loans	718			559
Other	117			130
	2,078			1,437
Net deferred tax assets before valuation allowance	13,011			15,539
Valuation allowance for deferred tax assets	(4,602		)	(4,375		)
Net deferred tax assets	$	8,409		$	11,164

The Company has approximately $7,378 of state operating loss carryforwards available to the Holding Company to offset future state taxable income.  The Company has approximately $10,043 of federal capital loss carryforwards and $10,181 of state capital loss carryforwards available to offset future capital gains.  The Company has recorded a valuation allowance against the tax effect of the state net operating loss, federal and state capital loss carryforwards, and investment security impairment as management believes it is more likely than not that such carryforwards will expire without being utilized.  The state operating loss carryforwards expire in 2019 and thereafter, and the capital loss carryforwards expire in 2012 through 2016.