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Note 6 - INCOME TAXES | 3 Months Ended
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Mar. 31, 2025
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, 2025 and 2024: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | For the Three Months Ended March 31, | ​
​ | ​ | 2025 | ​ | 2024 | ​
​ | ​ | ​ | ​ | ​ | % of | ​ | ​ | ​ | ​ | % of | ​
​ | ​ | ​ | ​ | ​ | Pretax | ​ | ​ | ​ | ​ | Pretax | ​
​ |  | Amount |  | Income |  | Amount |  | Income |
​ | ​ | (dollars in thousands) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Computed "expected" tax expense | ​ | $ | 5,482 |  | 21.0 | % | $ | 5,859 |  | 21.0 | %
Tax exempt income, net | ​ |  | (4,390) |  | (16.8) | ​ |  | (3,775) |  | (13.5) | ​
Bank-owned life insurance | ​ |  | (110) |  | (0.4) | ​ |  | (182) |  | (0.7) | ​
State income taxes, net of federal benefit, current year | ​ |  | 448 |  | 1.7 | ​ |  | 1,014 |  | 3.6 | ​
Tax credits | ​ |  | (457) |  | (1.8) | ​ |  | (86) |  | (0.3) | ​
Income from tax credit equity investments | ​ | ​ | (428) | ​ | (1.6) | ​ | ​ | (596) | ​ | (2.1) | ​
Excess tax benefit on stock options exercised and restricted stock awards vested | ​ |  | (490) |  | (1.9) | ​ |  | (470) |  | (1.7) | ​
Other | ​ |  | 253 |  | 1.0 | ​ |  | (592) |  | (2.1) | ​
Federal and state income tax expense | ​ | $ | 308 |  | 1.2 | % | $ | 1,172 |  | 4.2 | %
​ | ​ | ​ | ​ |  | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ The effective tax rate for the first quarter of 2025 was exceptionally low at 1%, down from 4% in the first quarter of 2024. The decline was primarily due to a combination of the tax benefits from equity compensation in the first quarter of 2025, new state tax credit investments, and lower pre-tax income from lower capital markets revenue. Given a more normalized mix of revenue, the Company expects its effective tax rate to increase in the second quarter of 2025. ​ Effective January 1, 2024, the Company made an election under ASU 2023-02 to account for its tax credit investments using the proportional amortization method under newly adopted accounting guidance. Under the proportional amortization method, the Company applies a practical expedient for its tax credit investments and amortizes the initial cost of the qualifying investments in proportion to the income tax credits received in the current period as compared to the total income tax credits expected to be received over the life of the investment. ​ 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, 2025 | ​ | December 31, 2024 | ​ | March 31, 2024 | ​
​ | ​ | (dollars in thousands) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Tax credits recognized | ​ | $ | 2,707 | ​ | $ | 1,711 | ​ | $ | 2,204 | ​
Other tax benefits recognized | ​ |  | 496 | ​ |  | 618 | ​ |  | 729 | ​
Amortization | ​ |  | (2,192) | ​ |  | (2,084) | ​ |  | (2,061) | ​
Net benefit included in income tax | ​ |  | 1,011 | ​ |  | 245 | ​ |  | 872 | ​
​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​
Other income | ​ |  | — | ​ |  | — | ​ |  | — | ​
Allocated income on investments | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​
Net benefit included in noninterest income | ​ | ​ | — | ​ | ​ | — | ​ | ​ | — | ​
​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​
Net benefit included in the Consolidated Statements of Income | ​ | $ | 1,011 | ​ | $ | 245 | ​ | $ | 872 | ​
​ | ​ | ​ | ​ | ​ |  | ​ | ​ | ​ | ​ | ​
​ 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, 2025 and 2024. ​

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