NOTE 6 - INCOME TAXES

3 Months Ended

Mar. 31, 2026

INCOME TAXES

INCOME TAXES

NOTE 6 – INCOME TAXES

A reconciliation of the expected federal income tax expense to the income tax expense included in the consolidated statements of income is as follows for the three months ended March 31, 2026 and 2025:

	For the Three Months Ended March 31,
	2026				2025
			% of				% of
			Pretax				Pretax
	Amount		Income		Amount		Income
	(dollars in thousands)
U.S. federal statutory tax rate	$	7,520	21.0	%	$	5,482	21.0	%
State and local income taxes, net of federal income tax effect (*)		1,029	2.9			448	1.7
Tax credits
Low income housing tax credits		(1,021)	(2.9)			(690)	(2.6)
Other credits		(49)	(0.1)			(195)	(0.7)
Nontaxable or nondeductible items
Tax exempt income, net		(7,458)	(20.8)			(7,505)	(28.7)
Interest disallowance		2,916	8.1			3,115	11.9
Bank-owned life insurance		(176)	(0.5)			(110)	(0.4)
Meals and entertainment		27	0.1			21	0.1
Other		(130)	(0.4)			(142)	(0.6)
Changes in unrecognized tax benefits		165	0.5			—	—
Other adjustments
Excess tax benefit on stock options exercised and restricted stock awards vested		(584)	(1.6)			(490)	(1.9)
Provision adjustment		142	0.4			373	1.4
Other		47	0.1			1	—
Effective tax rate	$	2,428	6.8	%	$	308	1.2	%
* State taxes in Iowa made up the majority (greater than 50 percent) of the tax effect in this category.

The effective tax rate for the first three months of 2026 was at 6.8%, up from 1.2% in the first three months of 2025. The increase was primarily due to an overall increase in pre-tax income.

The following table summarizes the impact to the Consolidated Statements of Income relative to the Company’s tax credit programs for which it has elected to apply the proportional amortization method of accounting:

	For the Three Months Ended
	March 31, 2026		March 31, 2025
	(dollars in thousands)
Tax credits recognized	$	2,943	$	2,707
Other tax benefits recognized		426		496
Amortization		(2,233)		(2,192)
Net benefit included in income tax		1,136		1,011
Other income		—		—
Allocated income on investments		—		—
Net benefit included in noninterest income		—		—
Net benefit included in the Consolidated Statements of Income	$	1,136	$	1,011

The Company did not recognize impairment losses resulting from the forfeiture or ineligibility of income tax credits or other circumstances during the three months ending March 31, 2026 and 2025.