NOTE

12:

Income Taxes

The components of the Company’s income tax provision (benefit) were as follows:

	Years Ended
	December 31,
	2019		2018
	(In Thousands)
Current
U.S. federal	$	1,445	$	(123	)
Montana		912		349
Total current income tax provision		2,357		226
Deferred
U.S. federal		690		609
Montana		49		79
Total deferred income tax provision		739		688
Total income tax provision	$	3,096	$	914

The nature and components of deferred tax assets and liabilities were as follows:

	December 31,
	2019			2018
	(In Thousands)
Deferred tax assets:
Loans receivable	$	2,265		$	1,738
Deferred loan fees		424			314
Lease liability		500			-
Deferred compensation		833			630
Employee benefits		320			268
Unrealized losses on securities available-for-sale		-			479
Acquisition costs		271			306
Acquisition fair value adjustments		595			346
New Market Tax Credits carry forward		-			459
Alternative Minimum Tax carry forward		-			233
Other		429			364
Total deferred tax assets		5,637			5,137
Deferred tax liabilities:
Premises and equipment		841			796
Right of use asset		500			-
Federal Home Loan Bank stock		7			26
Mortgage servicing rights		2,483			1,680
Unrealized gains on securities available-for-sale		474			-
Goodwill		872			748
Intangibles		706			347
Other		246			350
Total deferred tax liabilities		6,129			3,947
Net deferred tax (liability) asset	$	(492	)	$	1,190

The Company believes, based upon the available evidence, that all deferred tax assets will be realized in the normal course of operations. Accordingly, these assets have

not

been reduced by a valuation allowance.

A reconciliation of the Company’s effective income tax provision (benefit) to the statutory federal income tax rate was as follows:

	Years Ended
	December 31,
	2019				2018
				% of				% of
				Pretax				Pretax
	Amount			Income	Amount			Income
	(Dollars in Thousands)
Federal income taxes at the statutory rate	$	2,933		21.00%	$	1,238		21.00%
State income taxes		943		6.75%		398		6.75%
Tax-exempt interest income		(264	)	-1.89%		(365	)	-6.19%
Income from bank-owned life insurance		(151	)	-1.08%		(128	)	-2.17%
New Market Tax Credits		(456	)	-3.26%		(456	)	-7.73%
Other, net		91		0.64%		227		3.84%
Actual tax expense and effective tax rate	$	3,096		22.16%	$	914		15.50%

Federal income tax credits received related to New Market Tax Credits were

$2,964,000

and were claimed over a

seven

-year credit allowance period starting in

November 2012,

and completed as of

November 2019.