Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

Note 15 – Income Taxes

The components of federal and state income tax expense (benefit) for the years ended December 31, 2011, 2010 and 2009 were as follows:

	2011			2010			2009
Current
Federal	$	5,558		$	4,167		$	4,761
State		1,641			790			761
Total Current		7,199			4,957			5,522
Deferred
Federal		(435	)		(286	)		(1,201	)
State		(235	)		(149	)		(314	)
Total Deferred		(670	)		(435	)		(1,515	)
Total	$	6,529		$	4,522		$	4,007

Recorded income tax expense differs from the expected tax expense (computed by applying the applicable statutory U.S. federal tax rate of 35% to income before income taxes).  During 2011, 2010 and 2009, the Company was in a graduated tax rate position.  The principal reasons for the difference are as follows:

	2011			2010			2009
Expected income taxes	$	6,265		$	4,649		$	4,277
Effects of:
Tax-exempt income		(618	)		(511	)		(483	)
Nondeductible interest expense		16			20			31
State taxes, net of federal taxes		914			417			291
Other items		52			47			(9	)
Effect of marginal tax rate		(100	)		(100	)		(100	)
Total	$	6,529		$	4,522		$	4,007

In 2011, the State of Illinois increased the corporate income tax rate from 7.3% to 9.5%. Tax expense recorded by the Company during 2011, 2010 and 2009 did not include any interest or penalties. Tax returns filed with the Internal Revenue Service and Illinois Department of Revenue are subject to review by law under a three-year statute of limitations. The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2008.

The tax effects of the temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2011 and 2010 are presented below:

	2011		2010
Deferred tax assets:
Allowance for loan losses	$	4,489	$	4,059
Available-for-sale investment securities		-		1,319
Deferred compensation		984		951
Supplemental retirement		370		357
Core deposit premium amortization		120		26
Interest on non-accrual loans		155		229
Other-than-temporary impairment on securities		1,662		1,261
Expense from other real estate properties held for sale		492		49
Other		148		211
Total gross deferred tax assets	$	8,420	$	8,462
Deferred tax liabilities:
Deferred loan costs	$	82	$	92
Goodwill		2,069		1,620
Prepaid expenses		187		135
FHLB stock dividend		334		322
Depreciation		790		373
Purchase accounting		274		587
Accumulated accretion		59		59
Available-for-sale investment securities		2,012		-
Total gross deferred tax liabilities	$	5,807	$	3,188
Net deferred tax assets	$	2,613	$	5,274

Net deferred tax assets are recorded in other assets on the consolidated balance sheets. No valuation allowance related to deferred tax assets was recorded at December 31, 2011 and 2010 as management believes it is more likely than not that the deferred tax assets will be fully realized.