NOTE 6 - INCOME TAXES

9 Months Ended

Sep. 30, 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 and nine months ended September 30, 2026 and 2025:

	For the Three Months Ended September 30,								For the Nine Months Ended September 30,
	2026				2025				2026				2025
			% of				% of				% of				% of
			Pretax				Pretax				Pretax				Pretax
	Amount		Income		Amount		Income		Amount		Income		Amount		Income
	(dollars in thousands)								(dollars in thousands)
U.S. federal statutory tax rate	$	8,399	21.0	%	$	8,517	21.0	%	$	24,210	21.0	%	$	20,419	21.0	%
State and local income taxes, net of federal income tax effect (*)		1,137	2.8			1,407	3.5			3,225	2.8			2,751	2.8
Tax credits
Low-income housing tax credits		(1,060)	(2.7)			(696)	(1.7)			(3,098)	(2.7)			(2,208)	(2.3)
Other credits		(49)	(0.1)			(67)	(0.2)			(145)	(0.1)			(202)	(0.2)
Nontaxable or nondeductible items
Tax exempt income, net		(7,726)	(19.3)			(8,475)	(20.9)			(22,715)	(19.7)			(23,940)	(24.6)
Interest disallowance		2,947	7.4			3,578	8.8			8,668	7.5			10,020	10.3
Bank-owned life insurance		(186)	(0.5)			(200)	(0.5)			(596)	(0.5)			(520)	(0.5)
Meals and entertainment		37	0.1			25	0.1			102	0.1			70	0.1
Other		(193)	(0.5)			(156)	(0.4)			(597)	(0.5)			(446)	(0.5)
Changes in unrecognized tax benefits		324	0.8			—	—			693	0.6			—	—
Other adjustments
Excess tax benefit on stock options exercised and restricted stock awards vested		(92)	(0.2)			(111)	(0.3)			(777)	(0.7)			(637)	(0.7)
Provision adjustment		—	—			—	—			153	0.1			373	0.5
Other		24	0.1			22	0.1			94	0.1			24	0.1
Effective tax rate	$	3,562	8.9	%	$	3,844	9.5	%	$	9,217	8.0	%	$	5,704	6.0	%
* 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 nine months of 2026 was at 8.0%, up from 6.0% in the first nine 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				For the Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026		September 30, 2025
	(dollars in thousands)				(dollars in thousands)
Tax credits recognized	$	2,966	$	2,647	$	8,850	$	7,942
Other tax benefits recognized		448		495		1,310		1,483
Amortization		(2,350)		(2,254)		(6,830)		(6,638)
Net benefit included in income tax		1,064		888		3,330		2,787
Other income		—		—		—		—
Allocated income on investments		—		—		—		—
Net benefit included in noninterest income		—		—		—		—
Net benefit included in the Consolidated Statements of Income	$	1,064	$	888	$	3,330	$	2,787

The Company did not recognize impairment losses resulting from the forfeiture or ineligibility of income tax credits or other circumstances during the three and nine months ending September 30, 2026 and 2025.