Income Taxes

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Income Taxes

10. INCOME TAXES

Components of income tax expense for 2011, 2010, and 2009 are as follows:

	2011		2010			2009
Current expense (benefit)	$	177,369	$	885,689		$	(172,776	)
Deferred taxes (benefit)		109,834		(301,954	)		681,115
Total income taxes	$	287,203	$	583,735		$	508,339

The reasons for the difference between the federal income taxes in the consolidated statements of income and the amount and percentage computed by the applying the combine statutory federal and state income tax rate to income taxes are as follows:

	2011					2010					2009
		Amount		%			Amount		%			Amount		%
Taxes at statutory income tax rate	$	594,436		34.0		$	829,584		34.0		$	789,118		34.0
Reductions in taxes resulting from exempt income		(299,120	)	(17.1	)		(258,179	)	(10.6	)		(296,863	)	(12.8	)
Other timing differences		(8,113	)	(0.5	)		12,330		0.5			16,084		0.7
Total income taxes	$	287,203		16.4		$	583,735		23.9		$	508,339		21.9

The sources of timing differences for tax reporting purposes and the related deferred taxes recognized in 2011, 2010, and 2009 are summarized as follows:

		2011			2010			2009
Nonaccrual loan interest	$	(6,608	)	$	(2,657	)	$	0
Foreclosed assets expenses		(162,459	)		(115,613	)		0
Intangible asset amortization		0			(298,699	)		0
Bad debt expense in excess of tax		(117,431	)		(75,398	)		(53,429	)
Realized impairment (loss) gain on equity securities		369,733			(65,520	)		436,800
Nonqualified retirement plan contribution / payments		0			9,347			9,348
Deferred compensation		0			0			340,000
Accretion of discounted bonds		31,323			25,943			39,905
Gain on disposition of discounted bonds		(40,635	)		(36,213	)		(27,110	)
Book and tax depreciation difference		35,911			256,856			(64,399	)
Total deferred taxes	$	109,834		$	(301,954	)	$	681,115

	December 31
	2011			2010
Deferred tax assets:
Nonaccrual loan interest	$	9,265		$	2,657
Foreclosed assets expenses		278,072			115,613
Intangible asset amortization		298,699			298,699
Bad debt expense in excess of tax		706,242			588,811
Realized loss on OTTI equity securities		900,947			1,270,680
Nonqualified retirement plan		(7,228	)		(7,228	)
Pension plan		713,359			729,920
Total deferred tax assets		2,899,356			2,999,152
Deferred tax liabilities:
Accretion on bonds and gain on discounted bonds		16,696			26,009
Book and tax depreciation difference		330,720			294,809
Unrealized gain on securities available for sale		474,877			198,349
Total deferred tax liabilities		822,293			519,167
Net deferred tax assets	$	2,077,063		$	2,479,985