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Income Taxes
 12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
Income Taxes

Note 10. Income Taxes

 

The components of income tax expense for the years ended December 31, 2012, 2011, and 2010 are as follows:

 

    2012     2011     2010  
Current:                        
Federal   $ 448,832     $ 720,259     $ 472,423  
State     186,616       261,679       253,573  
                         
Total current     635,448       981,938       725,996  
Deferred income taxes (benefits):                        
Federal     (5,130 )     (156,652 )     (231,837 )
State     43,489       (57,876 )     (8,648 )
                         
Total deferred taxes (benefits)     38,359       (214,528 )     (240,485 )
                         
Income tax expense   $ 673,807     $ 767,410     $ 485,511  

 

A reconciliation of income tax expense computed at the statutory rate of 34% to the actual income tax expense for the years ended December 31, 2012, 2011, and 2010 is as follows:

 

    2012     2011     2010  
                   
Income (loss) before income tax expense (benefit)   $ 3,338,887     $ 3,760,503     $ 2,550,296  
                         
Taxes computed at Federal income tax rate   $ 1,135,222     $ 1,278,569     $ 867,102  
Increase (decrease) resulting from:                        
Tax-exempt income     (644,546 )     (600,429 )     (530,509 )
State income taxes, net of Federal income tax benefit     151,869       134,510       161,650  
Other     31,262       (45,240 )     (12,732 )
                         
Income tax expense   $ 673,807     $ 767,410     $ 485,511  

  

The components of the net deferred income tax benefits as of December 31, 2012, 2011, and 2010 are as follows:

 

    2012     2011     2010  
                   
Deferred income tax benefits:                        
Accrued deferred compensation   $ 120,695     $ 108,861     $ 99,454  
Impairment loss on investment securities     1,212,351       1,212,351       1,176,090  
Allowance for credit losses     816,722       1,275,889       1,077,153  
Nonaccrual interest     283,045       69,103       69,103  
Alternative minimum tax credits     306,523       136,952       199,140  
Net unrealized depreciation on investment securities available for sale     -       -       663,477  
Accumulated depreciation     75,650       62,144       39,916  
Other real estate owned     -       -       2,644  
Reserve for unfunded commitments     78,890       78,890       78,890  
Total deferred income tax benefits     2,893,876       2,944,190       3,405,867  
                         
Deferred income tax liabilities:                        
Accumulated securities discount accretion     32,209       44,165       56,893  
Net unrealized appreciation on investment securities available for sale     1,626,412       1,219,126       -  
Total deferred income tax liabilities     1,658,621       1,263,291       56,893  
                         
Net deferred income tax benefits   $ 1,235,255     $ 1,680,899     $ 3,348,974  

 

Management has determined that no valuation allowance is required as it believes it is more likely than not that all of the deferred tax assets will be fully realizable in the future. At December 31, 2012, 2011, and 2010, management believes there are no uncertain tax positions under ASC Topic 740 Income Taxes (formerly FIN 48, Accounting for Uncertainty in Income Taxes).

 

The Company’s federal income tax returns for 2011, 2010, and 2009 are subject to examinations by the IRS generally for three years after they were filed. In addition, the Company’s state tax returns for the same years are subject to examination by state tax authorities for similar time periods. The 2012 income tax return will be filed in 2013.