Note 8 - Income Taxes

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Text Block]

NOTE 8:INCOME TAXES

The provision for income taxes is comprised of the following components:

(In thousands)	September 30, 2012		September 30, 2011
Income taxes currently payable	$	8,389	$	10,357
Deferred income taxes		86		(2,490	)
Provision for income taxes	$	8,475	$	7,867

The tax effects of temporary differences related to deferred taxes shown on the balance sheets were:

	September 30,			December 31,
(In thousands)	2012			2011
Deferred tax assets
Loans acquired	$	15,191		$	7,150
FDIC true-up liability		1,675			1,341
Allowance for loan losses		10,801			11,457
Valuation of foreclosed assets		792			393
Deferred compensation payable		1,621			1,591
FHLB advances		443			547
Vacation compensation		1,049			1,052
Accumulated depreciation		166			--
Loan interest		767			767
Other		565			522
Total deferred tax assets		33,070			24,820
Deferred tax liabilities
Accumulated depreciation		--			(189	)
Deferred loan fee income and expenses, net		(2,214	)		(1,742	)
FHLB stock dividends		(410	)		(430	)
Goodwill and core deposit premium amortization		(10,824	)		(9,725	)
FDIC indemnification asset		(23,357	)		(18,703	)
Available-for-sale securities		(376	)		(283	)
Other		(2,889	)		(569	)
Total deferred tax liabilities		(40,070	)		(31,641	)
Net deferred tax liabilities included in other liabilities on balance sheets	$	(7,000	)	$	(6,821	)

A reconciliation of income tax expense at the statutory rate to the Company's actual income tax expense is shown below:

(In thousands)	September 30, 2012			September 30, 2011
Computed at the statutory rate (35%)	$	9,844		$	9,427
Increase (decrease) in taxes resulting from:
State income taxes, net of federal tax benefit		773			665
Tax exempt interest income		(1,980	)		(2,093	)
Tax exempt earnings on BOLI		(377	)		(377	)
Other differences, net		215			245
Actual tax provision	$	8,475		$	7,867

The Company follows ASC Topic 740, Income Taxes, which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information.  A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.  Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met.  Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.  ASC Topic 740 also provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties.

The amount of unrecognized tax benefits may increase or decrease in the future for various reasons including adding amounts for current tax year positions, expiration of open income tax returns due to the statutes of limitation, changes in management’s judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the addition or elimination of uncertain tax positions.

The Company files income tax returns in the U.S. federal jurisdiction.  The Company’s U.S. federal income tax returns are open and subject to examinations from the 2008 tax year and forward.  The Company’s various state income tax returns are generally open from the 2005 and later tax return years based on individual state statute of limitations.