Income Taxes

12 Months Ended

Dec. 31, 2011

Note 10: Income Taxes

The Company files United States federal income tax returns, and Virginia and West Virginia state income tax returns. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to 2008.

Allocation of income tax expense between current and deferred portions is as follows:

	Years ended December 31,
	2011			2010			2009
Current		$	4,665		$	3,660		$	4,717
Deferred (benefit) expense			582			563			(1,057	)
Total income tax expense		$	5,247		$	4,223		$	3,660

The following is a reconciliation of the “expected” income tax expense, computed by applying the U.S. Federal income tax rate of 35% to income before income tax expense, with the reported income tax expense:

	Years ended December 31,
	2011			2010			2009
Computed “expected” income tax expense	$	8,010		$	6,927		$	6,293
Tax-exempt interest income		(2,517	)		(2,556	)		(2,556	)
Nondeductible interest expense		146			195			267
Other, net		(392	)		(343	)		(344	)
Reported income tax expense	$	5,247		$	4,223		$	3,660

The components of net deferred tax assets, included in other assets, are as follows:

	December 31,
	2011			2010
Deferred tax assets:
Allowance for loan losses and unearned fee income	$	3,159		$	2,857
Valuation allowance on other real estate owned		210			123
Deferred compensation and other liabilities		1,788			1,734
Net unrealized losses on securities available for sale		---			90
Total deferred tax assets	$	5,157		$	4,804

Deferred tax liabilities:
Fixed assets	$	(266	)	$	(72	)
Discount accretion on securities		---			(44	)
Deposit intangibles		(912	)		(798	)
Other		(138	)		(142	)
Net unrealized gains on securities available for sale		(1,425	)		---
Total deferred tax liabilities		(2,741	)		(1,056	)
Net deferred tax assets	$	2,416		$	3,748

The Company has determined that a valuation allowance for the gross deferred tax assets is not necessary at December 31, 2011 and 2010 because the realization of all gross deferred tax assets can be supported by the amount of taxes paid during the carryback period available under current tax laws.