Note 13 - Income Taxes

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

13. INCOME TAXES

The provision for federal income taxes for the years ended

December 31,

consists of:

(Dollar amounts in thousands)	2019		2018
Current payable	$	2,265	$	2,403
Deferred		327		(241	)
Total provision	$	2,592	$	2,162

The tax effects of deductible and taxable temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows at

December 31:

(Dollar amounts in thousands)	2019		2018
Deferred tax assets:
Allowance for loan and lease losses	$	1,288	$	1,327
Supplemental retirement plan		469		454
Investment security basis adjustment		18		18
Nonaccrual interest income		297		389
Accrued compensation		244		222
Deferred origination fees, net		30		-
Net unrealized loss on AFS securities		-		41
Lease liability		1,051		-
Gross deferred tax assets		3,397		2,451
Deferred tax liabilities:
Premises and equipment		583		328
Net unrealized gain on AFS securities		490		-
Net unrealized gain on equity securities		62		1
FHLB stock dividends		139		139
Intangibles		378		342
Mortgage servicing rights		82		75
Deferred origination fees, net		-		13
Acquisition fair value adjustments		253		275
Right of use assets		1,032		-
Other		4		5
Gross deferred tax liabilities		3,023		1,178
Net deferred tax assets	$	374	$	1,273

No

valuation allowance was established at

December 31, 2019

and

2018,

in view of the Company’s tax strategies, coupled with the anticipated future taxable income as evidenced by the Company’s earnings potential.

The reconciliation between the federal statutory rate and the Company’s effective consolidated income tax rate for the years ended

December 31,

is as follows:

(Dollar amounts in thousands)	2019						2018
				% of						% of
				Pretax						Pretax
	Amount			Income			Amount			Income
Provision at statutory rate	$	3,214			21.0	%	$	3,065			21.0	%
Tax-exempt income		(647	)		(4.2	)%		(622	)		(4.3	)%
Nondeductible interest expense		32			0.2	%		27			0.2	%
Stock-based compensation		-			-	%		(37	)		(0.3	)%
Other		(7	)		(0.1	)%		(271	)		(1.8	)%
Actual tax expense and effective rate	$	2,592			16.9	%	$	2,162			14.8	%

ASC

740

-

10

prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than

not

that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-

not

recognition threshold is measured at the largest amount of benefit that is greater than

50

percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-

not

recognition threshold should be recognized in the

first

subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that

no

longer meet the more-likely-than-

not

recognition threshold should be derecognized in the

first

subsequent financial reporting period in which that threshold is

no

longer met.

At

December 31, 2019

and

December 31, 2018,

the Company had

no

ASC

740

-

10

unrecognized tax benefits. The Company does

not

expect the total amount of unrecognized tax benefits to significantly increase within the next

12

months. The Company recognizes interest and penalties on unrecognized tax benefits as a component of income tax expense.

The Company and the Bank are subject to U.S. federal income tax as well as an income tax in the states of Ohio and Florida, and the Bank is subject to a capital-based franchise tax in the state of Ohio. The Company and the Bank are

no

longer subject to examination by taxing authorities for years before

December 31, 2016.