Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of the provision for income taxes for the years ended December 31, were as follows:

	2024		2023
	(Dollars in thousands)
Current federal tax provision	$	2,251	$	1,346
Current state tax (benefit) provision	(53)		8
Deferred tax (benefit) provision	(1,829)		266
	$	369	$	1,620

The total provision for income taxes differs from the amounts computed at the statutory federal income tax rate of 21% primarily due to the following for the years ended December 31:

	2024		2023
	(Dollars in thousands)
Computed “expected” tax expense	$	1,919	$	2,707
State tax (benefit) expense	(42)		7
Tax exempt interest	(1,222)		(906)
Increase in cash surrender value of COLI	(150)		(94)
Tax credits	(1,849)		(1,424)
Equity in losses of limited partnerships	1,436		1,150
Non-deductible expenses	295		202
Other	(18)		(22)
	$	369	$	1,620

Listed below are the significant components of the net deferred tax asset at December 31:

	2024		2023
	(Dollars in thousands)
Components of the deferred tax asset
Allowance for credit losses	$	1,942	$	1,720
Tax credit carryover	1,478		—
Deferred compensation	426		379
Loans held for sale	22		9
Core deposit intangible	36		61
Unrealized loss on investment securities available-for-sale	9,571		8,996
Other	46		39
Total deferred tax asset	13,521		11,204
Components of the deferred tax liability
Depreciation	(1,131)		(1,329)
Mortgage servicing rights	(377)		(379)
Limited partnership investments	(46)		(21)
Goodwill	(447)		(411)
Prepaid expenses	(214)		(162)
Total deferred tax liability	(2,215)		(2,302)
Net deferred tax asset	$	11,306	$	8,902

Deferred tax assets are recognized subject to management's judgment that it is more likely than not that the deferred tax asset will be realized. Based on the temporary taxable items, historical taxable income and estimates of future taxable income, the Company believes that it is more likely than not that the deferred tax assets at December 31, 2024 will be realized and therefore no valuation allowance is warranted.

The net deferred income tax asset is included in Other assets in the consolidated balance sheets at December 31, 2024 and 2023.

Based on management's evaluation, management has concluded that there were no significant uncertain tax positions requiring recognition in the Company's financial statements at December 31, 2024 or 2023. The Company is subject to income tax at the federal level and in the state of New Hampshire. Although the Company is not currently the subject of an examination by any taxing authority, the Company's tax years ended December 31, 2021 through 2023 are open to examination under applicable statutes of limitation. The 2024 tax return has not yet been filed.

The Company may from time to time be assessed interest and/or penalties by federal or state tax jurisdictions, although any such assessments historically have been minimal and immaterial to the Company's financial results. In the event that the Company receives an assessment for interest and/or penalties, it will be classified in the financial statements as Other expenses.