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Note 13 - Federal and State Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | Note 13. Federal and State Income Taxes Federal and state income tax expense was comprised of the following components for the years ended December 31, 2014, 2013, and 2012:
|  | 2014 |  |  | 2013 |  |  | 2012 |
Current |  | $ | 4,203,979 |  |  | $ | 5,639,933 |  |  | $ | 2,232,183 |
Deferred |  |  | (1,165,009 | ) |  |  | (1,021,991 | ) |  |  | 2,302,418 |
|  | $ | 3,038,970 |  |  | $ | 4,617,942 |  |  | $ | 4,534,601 |
A reconciliation of the expected federal income tax expense to the income tax expense included in the consolidated statements of income was as follows for the years ended December 31, 2014, 2013, and 2012:
|  | Years Ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
|  |  |  |  |  | % of |  |  |  |  |  |  | % of |  |  |  |  |  |  | % of |
|  |  |  |  |  | Pretax |  |  |  |  |  |  | Pretax |  |  |  |  |  |  | Pretax |
|  | Amount |  |  | Income |  |  | Amount |  |  | Income |  |  | Amount |  |  | Income |
Computed "expected" tax expense |  | $ | 6,297,027 |  |  |  | 35.0 | % |  | $ | 6,844,665 |  |  |  | 35.0 | % |  | $ | 6,174,295 |  |  |  | 35.0 | %
Effect of graduated tax rates |  |  | (79,529 | ) |  |  | (0.4 | ) |  |  | (123,868 | ) |  |  | (0.6 | ) |  |  | (20,775 | ) |  |  | (0.1 | )
Tax exempt income, net |  |  | (2,646,275 | ) |  |  | (14.7 | ) |  |  | (1,790,049 | ) |  |  | (9.2 | ) |  |  | (1,243,660 | ) |  |  | (7.0 | )
Bank-owned life insurance |  |  | (585,312 | ) |  |  | (3.3 | ) |  |  | (624,847 | ) |  |  | (3.2 | ) |  |  | (544,292 | ) |  |  | (3.1 | )
State income taxes, net of federal benefit, current year |  |  | 497,068 |  |  |  | 2.8 |  |  |  | 758,695 |  |  |  | 3.9 |  |  |  | 730,865 |  |  |  | 4.1 |
Change in unrecognized tax benefits |  |  | (6,395 | ) |  |  | - |  |  |  | 37,180 |  |  |  | 0.2 |  |  |  | (149,183 | ) |  |  | (0.8 | )
Acquisition costs |  |  | - |  |  |  | - |  |  |  | 248,952 |  |  |  | 1.3 |  |  |  | - |  |  |  | - |
Noncontrolling interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (166,081 | ) |  |  | (0.9 | )
Other |  |  | (437,614 | ) |  |  | (2.4 | ) |  |  | (732,786 | ) |  |  | (3.8 | ) |  |  | (246,568 | ) |  |  | (1.5 | )
|  | $ | 3,038,970 |  |  |  | 17.0 | % |  | $ | 4,617,942 |  |  |  | 23.6 | % |  | $ | 4,534,601 |  |  |  | 25.7 | %
Changes in the unrecognized tax benefits included in other liabilities are as follows for the years ended December 31, 2014 and 2013:
|  | 2014 |  |  | 2013 |
Balance, beginning |  | $ | 1,058,019 |  |  | $ | 994,078 |
Impact of tax positions taken during current year |  |  | 234,475 |  |  |  | 288,016 |
Gross increase related to tax positions of prior years |  |  | 16,915 |  |  |  | 16,939 |
Reduction as a result of a lapse of the applicable statute of limitations |  |  | (307,118 | ) |  |  | (241,014 | )
Balance, ending |  | $ | 1,002,291 |  |  | $ | 1,058,019 |
Included in the unrecognized tax benefits liability at December 31, 2014 are potential benefits of approximately $742,000 that, if recognized, would affect the effective tax rate. The liability for unrecognized tax benefits includes accrued interest for tax positions, which either do not meet the more-likely-than-not recognition threshold or where the tax benefit is measured at an amount less than the tax benefit claimed or expected to be claimed on an income tax return. At December 31, 2014 and 2013, accrued interest on uncertain tax positions was approximately $260,000 and $316,000, respectively. Estimated interest related to the underpayment of income taxes is classified as a component of “income taxes” in the statements of income. The Company’s federal income tax returns are open and subject to examination from the 2011 tax return year and later. Various state franchise and income tax returns are generally open from the 2010 and later tax return years based on individual state statute of limitations. The net deferred tax assets (liabilities) consisted of the following as of December 31, 2014 and 2013:
|  | 2014 |  |  | 2013 |
Deferred tax assets: |  |  |  |  |  |  |  |
Alternative minimum tax credits |  | $ | 5,018,008 |  |  | $ | 3,936,226 |
New markets tax credits |  |  | 2,100,000 |  |  |  | 1,500,000 |
Net unrealized losses on securities available for sale and derivative instruments |  |  | 1,186,544 |  |  |  | 8,468,118 |
Compensation |  |  | 8,266,896 |  |  |  | 7,056,579 |
Loan/lease losses |  |  | 7,393,437 |  |  |  | 6,890,532 |
Net operating loss carryforwards, federal and state |  |  | 2,415,284 |  |  |  | 2,914,140 |
Deferred loan origination fees, net |  |  | 13,536 |  |  |  | 143,949 |
Other |  |  | 482,908 |  |  |  | 410,640 |
|  |  | 26,876,613 |  |  |  | 31,320,184 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Premises and equipment |  |  | 1,216,080 |  |  |  | 1,575,582 |
Equipment financing leases |  |  | 24,701,676 |  |  |  | 23,191,514 |
Acquisition fair value adjustments |  |  | 1,774,157 |  |  |  | 1,319,981 |
Investment accretion |  |  | 45,580 |  |  |  | 45,463 |
Other |  |  | 619,121 |  |  |  | 551,080 |
|  |  | 28,356,614 |  |  |  | 26,683,620 |
Net deferred tax asset (liability) |  | $ | (1,480,001 | ) |  | $ | 4,636,564 |
At December 31, 2014, the Company had $6,424,739 of federal tax net operating loss carryforwards which are set to expire in varying amounts between 2029 and 2033. At December 31, 2014, the Company had $4,759,745 of state tax net operating loss carryforwards which are set to expire in varying amounts between 2017 and 2029. All of the federal tax net operating loss carryforwards and the majority of the state tax net operating loss carryforwards were acquired from Community National and CNB. The change in deferred income taxes was reflected in the consolidated financial statements as follows for the years ended December 31, 2014, 2013, and 2012:
|  | 2014 |  |  | 2013 |  |  | 2012 |
Provision for income taxes |  | $ | (1,165,009 | ) |  | $ | (1,021,991 | ) |  | $ | 2,302,418 |
Statement of stockholders' equity- accumulated other comprehensive income (loss), unrealized gains (losses) on securities available for sale, net, and unrealized losses on derivative instruments |  |  | 7,281,574 |  |  |  | (11,373,902 | ) |  |  | (35,008 | )
|  | $ | 6,116,565 |  |  | $ | (12,395,893 | ) |  | $ | 2,267,410 |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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