Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes:

Income Taxes

8.  INCOME TAXES

At December 31, 2011, the Bank has net operating loss carry forwards of approximately $6,800,000 for income tax purposes that expire in 2014 through 2028.

	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 amount used for income tax purposes.  For financial reporting purposes, a valuation allowance of $3,035,058 and $2,749,768   as of December 31, 2011 and 2010, respectively, has been recognized to offset the net deferred tax assets related to the cumulative temporary differences and the tax loss carry forwards.  Significant components of the Bank’s net deferred tax assets are as follows:
		December 31,
		2011			2010
Deferred tax assets(liabilities):
Provision for loan losses		$	212,652		$	214,918
Unrealized gain on investment securities			(19,710	)		(21,721	)
Depreciation			369,764			380,715
Net operating loss carryforwards			2,313,074			2,048,999
Other, net			159,278			126,858
Valuation allowance for deferred tax assets			(3,035,058	)		(2,749,768	)
Net deferred tax assets		$	-		$	-

	2011			2010
Effective rate reconciliation:
Tax at statutory rate (34%)	$	(350,622	)	$	(417,451	)
Nondeductible expenses		6,278			6,163
Increase in valuation allowance		285,290			344,592
Other		59,054			66,696
Total tax expense	$	-		$	-

Management has evaluated the Bank’s tax positions and concluded that the Bank has taken no uncertain tax positions that require adjustment to the financial statements. With few exceptions, the Bank is no longer subject to income tax examinations by the U.S. federal, state or local tax authorities for the years before 2007.