Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes

Note 9. Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Bank’s deferred tax assets and liabilities at December 31, 2024 and 2023 are as follows (in thousands):

(in thousands)	2024		2023
Deferred Tax Assets
Deferred Compensation - Pension Benefits	$	662	$	601
Unrealized Loss on Investment Securities Available-for-Sale		1,832		1,870
Allowance for Credit Losses		360		614
Charitable Contribution Carryforward		262		—
Net Operating Loss		289		—
Total Deferred Tax Assets		3,405		3,085
Deferred Tax Liabilities
Tax Over Book Accumulated Depreciation		(628)		(655)
Federal Home Loan Bank Stock Dividend		(35)		(29)
Deferred Loan Fees		(248)		(252)
Other		(47)		(86)
Total Deferred Tax Liabilities		(958)		(1,022)
Deferred Tax Asset, Net	$	2,447	$	2,063

Components of income tax expense (benefit) are as follows (in thousands):

(in thousands)	2024		2023
Current	$	42	$	14
Deferred		(400)		135
Total	$	(358)	$	149

The calculation of income tax and the effective tax rate are as follows (dollar amounts in thousands):

	For the Years Ended December 31,
			Effective				Effective
(dollars in thousands)	2024		Rate		2023		Rate
Income Tax Expense at Statutory Rates	$	(302)	21.0	%	$	199	21.0	%
Bank Owned Life Insurance		(63)	4.4			(54)	(5.7)
Other		7	(0.5)			4	0.4
Net	$	(358)	24.9	%	$	149	15.7	%

Retained earnings of the Bank at December 31, 2024 and 2023 include approximately $4,021,000 for which no deferred federal income tax liability has been recognized. This amount represents an allocation of income to bad debt deductions prior to January 1, 1988 for tax purposes only. Reduction of such allocated amounts for other than bad debt reserves would create income for tax purposes subject to the then-current income tax rate. The unrecorded deferred income tax liability on these amounts was approximately $844,000 at December 31, 2024 and 2023.

Based on the evaluation of available evidence, management determined that a valuation allowance was not required for deferred tax assets because it is more likely than not that these assets will be realized through future reversal of existing taxable temporary differences and there will be sufficient future taxable income exclusive of reversing temporary differences.