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## NOTE 11 

## LOAN SERVICING 

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The loans are serviced primarily for the Federal Home Loan Mortgage Corporation, and the unpaid balances totaled $105,865,000, $90,346,000 and $71,640,000 at December 31, 2003, 2002 and 2001. The amount of capitalized servicing assets is considered immaterial. 

## NOTE 12 

## INCOME TAX 

<img src='content_image/34707.jpg'>

Tax expense (benefit) applicable to security gains and losses for the years ended December 31, 2003, 2002 and 2001, was $380,000, $296,000 and ($80,000), respectively. 

A cumulative net deferred tax liability is included in the consolidated balance sheets. The components of the liability are as follows: 

<img src='content_image/34706.jpg'>

