Note 13 - Income Taxes

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 13 - INCOME TAXES

The provision for federal income taxes consists of (in thousands):

	2024		2023			2022
Income taxes currently payable	$	518		2,955			5,163
Deferred income tax provision (benefit)		1,951		(323	)		(345	)
Provision for income taxes	$	2,469		2,632			4,818

A reconciliation between the statutory income tax and the Company's effective tax rate follows:

	2024			2023			2022
Statutory tax rate		21.0	%		21.0	%		21.0	%
Increase (decrease) resulting from -
Tax exempt interest		(0.7	)%		(0.9	)%		(0.6	)%
Tax exempt income on bank owned life insurance		(2.2	)%		(1.6	)%		(0.8	)%
Captive insurance premium income		(1.5	)%		(0.8	)%		(0.9	)%
Affordable housing tax credit limited partnerships		(2.0	)%		(2.0	)%		(0.8	)%
Nondeductible merger-related expenses		0.9	%		1.7	%		—	%
Other, net		0.0	%		(0.2	)%		—	%
Effective tax rate		15.5	%		17.2	%		17.9	%

Deferred tax assets and liabilities, included in the Consolidated Balance Sheets with other assets, consist of the following at December 31 (in thousands):

	2024			2023
Deferred tax assets:
Allowance for credit losses	$	2,530			2,217
Net unrealized losses on investment securities available-for-sale		5,101			5,923
Fair value adjustment on loans acquired from mergers		4,981			5,895
Benefit plans		203			277
Deferred compensation		556			580
Minimum pension liability		—			15
Operating lease liabilities		1,198			1,242
Net operating loss carryforwards		4,551			—
Tax credit carryforwards		718			—
Other		420			478
		20,258			16,627
Deferred tax liabilities:
Depreciation of premises and equipment		(1,527	)		(1,395	)
Amortization of intangibles		(3,588	)		(2,808	)
Mortgage servicing rights		(653	)		(865	)
Prepaid expenses		(575	)		(525	)
FHLB stock dividends		(589	)		(501	)
Operating lease right-of-use assets		(1,198	)		(1,243	)
Fair value adjustment on time deposits acquired from mergers		—			(222	)
Deferred gain on loans sold		(305	)		(305	)
Other, net		(130	)		(198	)
		(8,565	)		(8,062	)
Net deferred tax assets (liabilities)	$	11,693			8,565

As of December 31, 2024 and 2023 there were no unrecognized tax benefits and the Company does not anticipate the total amount of unrecognized tax benefits will significantly change within the next twelve months.  There were no amounts recognized for interest and penalties in the Consolidated Statements of Income for the three-year period ended December 31, 2024.

As of December 31, 2024, as a result of the acquisitions of CNNB and EFBI, the Company has federal net operating loss carryforwards of $547,000, which expire beginning in 2027, and $21,079,000 that do not expire.  The use of the federal net operating loss carryforwards are limited by Internal Revenue Code Section 382, but they are currently expected to be utilized before their respective expiration dates.

The Company is no longer subject to examination by federal tax authorities for years before 2021.