Note 9 - Income Taxes

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Text Block]

9.  INCOME TAXES

Income Tax Expense

(Dollar amounts in thousands)

	Quarters Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Income before income tax expense	$	7,126		$	13,373		$	16,174		$	23,326
Income tax expense:
Federal income tax expense	$	126		$	1,567		$	971		$	2,477
State income tax expense		635			1,153			946			152
Total income tax expense	$	761		$	2,720		$	1,917		$	2,629
Effective income tax rate		10.7	%		20.3	%		11.9	%		11.3	%

Federal income tax expense and the related effective income tax rate are primarily influenced by the amount of tax-exempt income derived from investment securities and bank-owned life insurance in relation to pre-tax income and state income taxes. State income tax expense and the related effective tax rate are influenced by the amount of state tax-exempt income in relation to pre-tax income and state tax rules relating to consolidated/combined reporting and sourcing of income and expense.

Income tax expense decreased for the 2012 periods presented compared to the same periods in 2011. The decreases resulted primarily from decreases in pre-tax income in the 2012 periods compared to 2011. This was partially offset by benefits recorded in the first quarter of 2011 related to Illinois tax law changes that became effective in that period.

Our accounting policies underlying the recognition of income taxes in the Consolidated Statements of Financial Condition and Income are included in Notes 1 and 14 to the Consolidated Financial Statements of our 2011 10-K.