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Note 11 - Federal Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | NOTE 11 - FEDERAL INCOME TAXES The consolidated income tax expense is as follows:
|  | 2015 |  |  | 2014 |  |  | 2013 |
Current expense |  | $ | 7,399,000 |  |  | $ | 3,359,000 |  |  | $ | 0 |
Deferred expense |  |  | 4,592,000 |  |  |  | 4,506,000 |  |  |  | 8,092,000 |
Change in valuation allowance |  |  | (180,000 | ) |  |  | 0 |  |  |  | 0 |
Tax expense |  | $ | 11,811,000 |  |  | $ | 7,865,000 |  |  | $ | 8,092,000 |
A reconciliation of the differences between the federal income tax expense recorded and the amount computed by applying the federal statutory rate to income before income taxes is as follows:
|  | 2015 |  |  | 2014 |  |  | 2013 |
Tax at statutory rate (35%) |  | $ | 13,591,000 |  |  | $ | 8,819,000 |  |  | $ | 8,794,000 |
Increase (decrease) from |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt interest |  |  | (781,000 | ) |  |  | (621,000 | ) |  |  | (347,000 | )
Bank owned life insurance |  |  | (384,000 | ) |  |  | (415,000 | ) |  |  | (465,000 | )
Change in valuation allowance |  |  | (180,000 | ) |  |  | 0 |  |  |  | 0 |
Other |  |  | (435,000 | ) |  |  | 82,000 |  |  |  | 110,000 |
Tax expense |  | $ | 11,811,000 |  |  | $ | 7,865,000 |  |  | $ | 8,092,000 |
Significant components of deferred tax assets and liabilities as of December 31, 2015 and 2014 are as follows:
|  | 2015 |  |  | 2014 |
Deferred income tax assets |  |  |  |  |  |  |  |
Allowance for loan losses |  | $ | 5,488,000 |  |  | $ | 7,014,000 |
Deferred compensation |  |  | 1,367,000 |  |  |  | 1,304,000 |
Stock compensation |  |  | 767,000 |  |  |  | 521,000 |
Nonaccrual loan interest income |  |  | 602,000 |  |  |  | 471,000 |
Deferred loan fees |  |  | 504,000 |  |  |  | 445,000 |
Losses on capital investments |  |  | 270,000 |  |  |  | 450,000 |
Fair value write-downs on foreclosed properties |  |  | 115,000 |  |  |  | 212,000 |
Fair value of interest rate swap |  |  | 89,000 |  |  |  | 89,000 |
Tax credit carryforwards |  |  | 0 |  |  |  | 3,395,000 |
Business combination adjustments |  |  | 0 |  |  |  | 315,000 |
Other |  |  | 283,000 |  |  |  | 410,000 |
Deferred tax asset before valuation allowance |  |  | 9,485,000 |  |  |  | 14,626,000 |
Valuation allowance |  |  | (270,000 | ) |  |  | (450,000 | )
Deferred tax asset after valuation allowance |  |  | 9,215,000 |  |  |  | 14,176,000 |
Deferred income tax liabilities |  |  |  |  |  |  |  |
Depreciation |  |  | 1,128,000 |  |  |  | 1,217,000 |
Prepaid expenses |  |  | 378,000 |  |  |  | 425,000 |
Core deposit intangible |  |  | 4,349,000 |  |  |  | 5,386,000 |
Mortgage loan servicing rights |  |  | 2,142,000 |  |  |  | 2,349,000 |
Unrealized gain on securities |  |  | 768,000 |  |  |  | 112,000 |
Business combination adjustments |  |  | 1,091,000 |  |  |  | 0 |
Other |  |  | 188,000 |  |  |  | 476,000 |
Deferred tax liability |  |  | 10,044,000 |  |  |  | 9,965,000 |
Total net deferred tax asset (liability) |  | $ | (829,000 | ) |  | $ | 4,211,000 |
A valuation allowance related to deferred tax assets is required when it is considered more likely than not that all or part of the benefits related to such assets will not be realized. At December 31, 2014, we carried a valuation allowance against the $0.5 million deferred tax asset associated with certain capital investments acquired in our merger with Firstbank. During 2015, we disposed of these investments entirely, partially offsetting the capital loss incurred for tax purposes with capital gains resulting from the FHLBI initiated repurchase of its excess shares. We reversed $0.2 million of the valuation allowance due to the capital gain, and continue to carry a valuation allowance on the $0.3 million deferred tax asset associated with $0.8 million of capital loss carry forward that will expire at December 31, 2020. We believe the remainder of our deferred tax assets are more likely than not to be realized. We had no unrecognized tax benefits at any time during 2015 or 2014 and do not anticipate any significant increase in unrecognized tax benefits during 2016. Should the accrual of any interest or penalties relative to unrecognized tax benefits be necessary, it is our policy to record such accruals in our income tax accounts; no such accruals existed at any time during 2015 or 2014. Our U.S. federal income tax returns are no longer subject to examination for all years before 2012.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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