Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 11 – Income Taxes

The components of income tax expense for the years ended December 31 are as follows:

	(In Thousands)
	2023		2022			2021
Current:
Federal	$	3,052	$	7,430		$	7,536
State		287		359			271
Total current		3,339		7,789			7,807
Deferred:
Federal		2,182		227			(1,746	)
State		46		(56	)		(59	)
Total deferred		2,228		171			(1,805	)
Total Income Tax	$	5,567	$	7,960		$	6,002

The following is a reconciliation of the statutory federal income tax rate to the effective tax rate:

	(In Thousands)
	2023			2022			2021
Federal income tax at statutory rates	$	5,954		$	8,489		$	6,194
(Decrease) increase resulting from:
State income tax, net of federal benefit		264			239			167
Tax exempt interest		(129	)		(133	)		(116	)
Section 831 deduction		(187	)		(270	)		(294	)
Other		(335	)		(365	)		51
Total Income Tax	$	5,567		$	7,960		$	6,002

Deferred tax assets and liabilities at December 31 are comprised of the following:

	(In Thousands)
	2023		2022
Deferred Tax Assets:
Allowance for credit losses	$	5,888	$	4,623
Deferred compensation		547		570
Net unrealized loss on available-for-sale securities		7,712		10,163
Fair value adjustments		1,179		2,152
Other		307		554
Total deferred tax assets		15,633		18,062
Deferred Tax Liabilities:
Accreted discounts on bonds		95		54
Depreciation		2,409		1,083
FHLB stock dividends		880		1,011
Intangible amortization		2,421		2,640
Loan servicing rights		1,252		787
Prepaids		244		500
Other		488		424
Total deferred tax liabilities		7,789		6,499
Net Deferred Tax Asset	$	7,844	$	11,563

The Peoples Federal Savings and Loan acquisition included a net operating loss (NOL) carryforward of $2,789,124 that had a remaining balance of $2.0 million and $2.6 million at December 31, 2023 and 2022, respectively.

The Corporation has additional paid-in capital that is considered restricted resulting from the acquisition of Perpetual in 2021 of approximately $2,779,000 and from the acquisition of Peoples in 2022 of approximately $2,174,000. No

deferred tax liability is required to be recorded for the Corporation’s tax bad debt reserves arising before December 31, 1987, unless it is apparent that the reserves will reverse in the near future. Unrecognized deferred taxes on these reserves would total $1,040,000. If the portion of retained earnings representing these reserves is used for any purpose other than to absorb bad debts, it will be added to future taxable income and the related tax will be recognized as expense.