Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

(12) Income Taxes

US GAAP provides guidance on financial statement recognition and measurement of tax positions taken, or expected to be taken, in tax returns.  As of June 30, 2011 and December 31, 2010 the gross amount of unrecognized tax benefits was $308,000 and $230,000, respectively.  At June 30, 2011, if recognized, $284,000 of the tax benefits would increase net income, resulting in a decrease of the effective tax rate.  The amount of unrecognized tax benefits may increase or decrease in the future for various reasons including adding amounts for current tax year positions, expiration of open income tax returns due to statutes of limitation, changes in management’s judgment about the level of uncertainty, status of examination, litigation and legislative activity and the addition or elimination of uncertain tax positions.

Bancorp’s policy is to report interest and penalties, if any, related to unrecognized tax benefits in income tax expense.  As of June 30, 2011 and December 31, 2010, the amount accrued for the potential payment of interest and penalties was $20,000.