Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income Taxes

(9)  Income Taxes

The components of income tax (benefit) expense for the years ended December 31 are as follows:

	2012			2011			2010
Current Federal (Benefit) Expense	$	(3,588	)	$	311,174		$	(1,037,717	)
Deferred Federal (Benefit) Expense		1,204,439			867,006			639,607
Federal Income Tax (Benefit) Expense		1,198,325			1,178,180			(398,110	)
Current State Income Tax (Benefit) Expense		2,526			(74,297	)		(61,104	)
	$	1,200,851		$	1,103,883		$	(459,214	)

The federal income tax (benefit) expense of $1,200,851 in 2012, $1,178,180 in 2011 and $(398,110) in 2010 is different than the income taxes computed by applying the federal statutory rates to income before income taxes.  The reasons for the differences are as follows:

	2012			2011			2010
Statutory Federal Income Taxes	$	1,306,331		$	1,228,538		$	5,101
Tax-Exempt Interest		(94,891	)		(126,468	)		(117,586	)
Interest Expense Disallowance		4,908			8,751			8,400
Premiums on Officers' Life Insurance		(59,603	)		(52,431	)		(134,106	)
Meal and Entertainment Disallowance		25,567			20,693			24,972
Other		16,013			99,097			(184,891	)
Actual Federal Income Taxes	$	1,198,325		$	1,178,180		$	(398,110	)

Deferred taxes in the accompanying consolidated balance sheets as of December 31 include the following:

	2012			2011
Deferred Tax Assets
Allowance for Loan Losses	$	4,330,553		$	5,320,862
Other Real Estate		1,668,653			1,012,326
Deferred Compensation		342,547			386,225
Restricted Stock		-			508,547
Goodwill		345,762			392,124
Net Operating Loss Carryforward		2,310,708			2,992,777
Other		529,706			559,836
		9,527,929			11,172,697
Deferred Tax Liabilities
Premises and Equipment		(1,232,905	)		(1,195,334	)
Vested Restricted Stock		-			(476,540	)
Other		(4,185	)		(4,185	)
		(1,237,090	)		(1,676,059	)
Deferred Tax Assets (Liabilities) on   Unrealized Securities Gains (Losses)		77,177			(983,807	)
Net Deferred Tax Assets	$	8,368,016		$	8,512,831

As discussed in Note 1, certain positions taken in the Company's tax returns may be subject to challenge by the taxing authorities.  An analysis of activity related to unrecognized taxes follows as of December 31, 2012 and 2011.

	2012			2011
Balance, Beginning	$	33,368		$	78,121
Positions Taken During the Current Year		11,794			14,275
Reductions Resulting from Lapse of Statutes of Limitation		(6,486	)		(59,028	)
Balance, Ending	$	38,676		$	33,368

The net increase (decrease) of $5,308 and $(44,753) is included in income tax expense for the years ended December 31, 2012 and 2011, respectively.

The Company has cumulative federal net operation loss carryforwards of $4,299,505 at December 31, 2012 that expire beginning in 2021.

The Company considers the determination of the deferred tax asset amount and the need for any valuation reserve to be a critical accounting policy that requires significant judgment.  The Company has, in its judgment, made reasonable assumptions and considered both positive and negative evidence relating to the ultimate realization of deferred tax assets.  Based upon this evaluation, the Company determined that a valuation allowance on its deferred tax asset was not required as of December 31, 2012.