INCOME TAXES

12 Months Ended

Dec. 31, 2011

INCOME TAXES [Abstract]

INCOME TAXES

12. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities as of December 31, 2011 and 2010 are as follows (in thousands):

	2011		2010
Deferred tax assets:
Allowance for loan losses	$	2,474	$	3,047
Alternative minimum tax credit		1,158		1,005
Other		1,357		517
Total deferred tax assets		4,989		4,569
Deferred tax liabilities:
Premises and equipment		3,792		4,057
FHLB stock dividends		18		17
Unrealized gains on securities		3,993		2,155
Other		351		158
Total deferred tax liabilities		8,154		6,387
Net deferred tax liability	$	3,165	$	1,818

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, we believe that it is more likely than not that we will realize the benefits of these deductible differences existing at December 31, 2011. Therefore, no valuation allowance is necessary at this time.  The net deferred tax liability is included in other liabilities on the consolidated balance sheets.

Components of income tax expense are as follows (in thousands):

	2011			2010			2009
Current	$	1,055		$	2,001		$	666
Deferred benefit		(491	)		(1,033	)		(541	)
Total income tax expense	$	564		$	968		$	125

The provision for federal income taxes differs from the amount computed by applying the U.S. Federal income tax statutory rate of 34% on pre-tax income as follows (in thousands):

	December 31,
	2011			2010			2009
Taxes calculated at statutory rate	$	1,713		$	2,294		$	1,606
Increase (decrease) resulting from:
Tax-exempt interest, net		(1,121	)		(1,293	)		(1,402	)
Tax credits		-			-			(108	)
Other		(28	)		(33	)		29
	$	564		$	968		$	125

The tax credits available to the Company for the 2009 tax year included the Work Opportunity Tax Credit.

The Company's federal income tax returns are open and subject to examination from the 2008 tax return year and forward. The various state income and franchise tax returns are generally open from the 2008 and later tax return years based on individual state statutes of limitation. We are not currently under examination by federal or state tax authorities for the 2008, 2009, or 2010 tax years.