Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes [Abstract]

Income Taxes

(6) Income Taxes

     Our Company follows ASC Topic 740, Income Taxes, which addresses the accounting for uncertain tax positions. At June 30, 2011 and December 31, 2010, our Company had $221,000 of gross unrecognized tax benefits that if recognized would affect the effective tax rate. Our Company believes that during 2011 it is reasonably possible that there would be a reduction of $221,000 in gross unrecognized tax benefits as a result of the lapse of statute of limitations for the 2007 tax year. At June 30, 2011, total interest accrued on unrecognized tax benefits was approximately $40,000. As of June 30, 2011, there were no federal or state income tax examinations in process.

     The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not our Company will realize the benefits of these temporary differences at June 30, 2011 and, therefore, has not established a valuation reserve.

     Income taxes as a percentage of earnings before income taxes as reported in the consolidated financial statements were 32.0% and 28.5% for the three months ended June 30, 2011 and 2010, and 32.0% and 28.1% for the six months ended June 30, 2011 and 2010, respectively. The effective tax rate for the three and six months ended June 30, 2011 reflects a decrease in tax-exempt income as a percentage of total taxable income.