INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

INCOME TAXES [Abstract]

Components of income tax expense

For the years ended December 31, 2012, 2011 and 2010, income tax expense attributable to income from operations consisted of the following:

Current:	2012		2011		2010
State	$	529,603	$	24,739	$	511,022
Federal		4,207,980		1,592,276		4,440,767
		4,737,583		1,617,015		4,951,789
Deferred expense		646,899		3,416,135		153,450
	$	5,384,482	$	5,033,150	$	5,105,239

Effective income tax expense

Income tax expense differed from the amounts computed by applying the U.S. Federal statutory income tax rate to income before income tax expense as follows:

	2012			2011			2010
Tax computed at statutory rate	$	5,578,285		$	5,294,107		$	5,170,418
Tax-exempt interest		(506,280	)		(543,638	)		(505,644	)
Dividend exclusion		(39,237	)		(35,439	)		(27,805	)
State taxes, net of Federal impact		438,582			386,214			299,284
Nondeductible interest expense		16,119			23,242			27,253
Other items, net		(102,987	)		(91,336	)		141,733
Income tax expense	$	5,384,482		$	5,033,150		$	5,105,239

Deferred tax assets and deferred tax liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2012 and 2011, are presented below:

	2012		2011
Deferred tax assets:
Allowance for loan losses	$	3,989,953	$	3,688,822
Accrual for employee benefit plans		780,282		829,414
Depreciation		698,373		340,274
Deferred compensation and directors' fees		924,582		894,410
Purchase accounting adjustment – deposits		141,784		314,802
Purchase accounting adjustment – loans		612,696		2,163,551
Purchase accounting adjustment - fixed assets		223,602		223,277
Accounting for defined benefit pension and other benefit plans		6,776,728		5,901,720
Trust preferred impairment write down		1,340,893		1,338,943
Other		723,419		633,884
Total gross deferred tax assets	$	16,212,312	$	16,329,097

Deferred tax liabilities:	2012		2011
Deferred loan fees and costs	$	908,343	$	924,500
Prepaid pension		6,102,441		6,694,664
Net unrealized gains on securities available for sale		5,165,238		5,090,655
Other		1,100,783		837,297
Total gross deferred tax liabilities		13,276,805		13,547,116
Net deferred tax asset	$	2,935,507	$	2,781,981

Reconciliation of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest) is as follows:

	2011			2010
Balance at January 1	$	123,530		$	-
Additions for tax positions of current year		-			123,530
Reductions related to settlement with taxing authorities		(123,530	)		-
Balance at December 31	$	-		$	123,530