Audited Financial Statements ASC 740 defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more- likely-than-not” to be sustained by the taxing authority. This section also provides guidance on the de-recognition,  measurement, and classification of income tax uncertainties in interim periods. As of December 31, 2011, the Company had  no unrecognized tax benefits related to federal or state income tax matters. The Company does not anticipate any material  increase or decrease in unrecognized tax benefits during 2012 relative to any tax positions taken prior to December 31, 2011. As of December 31, 2011, the Company has accrued no interest and no penalties related to uncertain tax positions. It is the  Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. The Company and its subsidiaries file consolidated U.S. federal and State of Alabama income tax returns. The  Company is currently open to audit under the statute of limitations by the Internal Revenue Service and the State of Alabama  for the years ended December 31, 2008 through 2011.  The Company has a 401(k) Plan that covers substantially all employees. Participants may contribute up to 10% of  eligible compensation subject to certain limits based on federal tax laws. The Company’s matching contributions to the Plan  are determined by the board of directors. Participants become 20% vested in their accounts after two years of service and  100% vested after six years of service. Company matching contributions to the Plan were $110 thousand, $113 thousand,  and $120 thousand for the years ended December 31, 2011, 2010 and 2009, respectively, and are included in salaries and  benefits expense. Financial derivatives are reported at fair value in other assets or other liabilities. The accounting for changes in the fair  value of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship. For  derivatives not designated as part of a hedging relationship, the gain or loss is recognized in current earnings. From time to  time, the Company may enter into interest rate swaps (“swaps”) to facilitate customer transactions and meet their financing  needs. Upon entering into these instruments to meet customer needs, the Company enters into offsetting positions in order to  minimize the risk to the Company. These swaps qualify as derivatives, but are not designated as hedging instruments. At  December 31, 2011, the Company had no derivative contracts to assist in managing its interest rate sensitivity. Interest rate swap contracts involve the risk of dealing with counterparties and their ability to meet contractual terms.  When the fair value of a derivative instrument contract is positive, this generally indicates that the counterparty or customer  owes the Company, and results in credit risk to the Company. When the fair value of a derivative instrument contract is  negative, the Company owes the customer or counterparty and therefore, has no credit risk.  A summary of the Company’s interest rate swaps as of and for the year end December 31, 2011 is presented below. NOTE 14: EMPLOYEE BENEFIT PLAN NOTE 15: DERIVATIVE INSTRUMENTS  page 67 Other Other Other noninterest Assets Liabilities income Estimated Estimated Gains (Dollars in thousands) Notional Fair Value Fair Value (Losses) Interest rate swap agreements: Pay fixed / receive variable $ 5,717 — 1,325 $ (224) Pay variable / receive fixed 1,325 — 224 Total interest rate swap agreements $ 11,434 1,325 $ —