Federal Income Taxes

6 Months Ended

Jun. 30, 2011

Federal Income Taxes [Abstract]

FEDERAL INCOME TAXES

NOTE 10 — FEDERAL INCOME TAXES

The reconciliation of the provision for federal income taxes and the amount computed at the federal statutory tax rate of 34% of income before federal income tax expense is as follows for the three and six month periods ended June 30:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2011			2010			2011			2010
Income taxes at 34% statutory rate	$	1,076		$	857		$	2,004		$	1,641
Effect of nontaxable income
Interest income on tax exempt municipal bonds		(385	)		(352	)		(768	)		(704	)
Earnings on corporate owned life insurance		(50	)		(49	)		(98	)		(106	)
Other		(162	)		(95	)		(256	)		(191	)
Total effect of nontaxable income		(597	)		(496	)		(1,122	)		(1,001	)
Effect of nondeductible expenses		13			8			23			11
Federal income tax expense	$	492		$	369		$	905		$	651

Included in other comprehensive income for the three and six month periods ended June 30 are changes in unrealized holding gains of $8 and $603 in 2011 and losses of $377 and $510 in 2010, respectively, related to auction rate money market preferred stock securities and preferred stocks. For federal income tax purposes, these securities are considered equity investments. As such, no deferred federal income taxes related to unrealized holding gains or losses are expected or recorded.