Note 2 - Income Taxes

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Text Block]

2.         INCOME TAXES

The Company’s effective tax rate decreased to 31.3% for the nine-month period ended September 30, 2012, compared to 36.6% for the same period in 2011.  The effective tax rate decreased to 34.9% for the three-month period ended September 30, 2012, compared to 35.7% for the same period in 2011.  This decrease was primarily the result of the recognition of an additional $79,000 in tax benefits due to the expiration of the U.S. Federal statute of limitations associated with certain tax positions.

The effective tax rate for the nine-month period ended September 30, 2012, is lower than the rate in the same period of 2011 primarily due to a reduction of current state income taxes by $45,000, as well as an adjustment to income taxes of $575,000 for decreases in deferred state tax rates resulting from legislative changes.  The Company also recorded federal tax credits of $87,000 and $198,000, and recognized an additional $79,000 in tax benefits when compared to 2011 due to the expiration of the U.S. Federal statute of limitations associated with certain tax positions.

The unrecognized tax benefit as of September 30, 2012, was $225,000, excluding interest of $11,000 and no penalties.  The full unrecognized tax benefits, if recognized, would favorably impact the effective income tax rate.  The Company believes it is reasonably possible that the total amount of unrecognized tax benefits could decrease during the next 12 months due to the expiration of the U.S. federal statute of limitations associated with certain other tax positions.  The Company accrues interest and penalties related to uncertain tax position in the statements of income as income tax expense.