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Note 11 - Federal Income Taxes | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | NOTE 11 - FEDERAL INCOME TAXES The consolidated income tax expense is as follows:
|  | 2016 |  |  | 2015 |  |  | 2014 |
Current expense |  | $ | 15,786,000 |  |  | $ | 7,399,000 |  |  | $ | 3,359,000 |
Deferred expense |  |  | (699,000 | ) |  |  | 4,592,000 |  |  |  | 4,506,000 |
Change in valuation allowance |  |  | (113,000 | ) |  |  | (180,000 | ) |  |  | 0 |
Tax expense |  | $ | 14,974,000 |  |  | $ | 11,811,000 |  |  | $ | 7,865,000 |
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:
|  | 2016 |  |  | 2015 |  |  | 2014 |
Tax at statutory rate (35%) |  | $ | 16,410,000 |  |  | $ | 13,591,000 |  |  | $ | 8,819,000 |
Increase (decrease) from |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt interest |  |  | (876,000 | ) |  |  | (781,000 | ) |  |  | (621,000 | )
Bank owned life insurance |  |  | (440,000 | ) |  |  | (384,000 | ) |  |  | (415,000 | )
Change in valuation allowance |  |  | (113,000 | ) |  |  | (180,000 | ) |  |  | 0 |
Other |  |  | (7,000 | ) |  |  | (435,000 | ) |  |  | 82,000 |
Tax expense |  | $ | 14,974,000 |  |  | $ | 11,811,000 |  |  | $ | 7,865,000 |
Significant components of deferred tax assets and liabilities as of December 31, 2016 and 2015 are as follows:
|  | 2016 |  |  | 2015 |
Deferred income tax assets |  |  |  |  |  |  |  |
Allowance for loan losses |  | $ | 6,286,000 |  |  | $ | 5,488,000 |
Deferred compensation |  |  | 1,175,000 |  |  |  | 1,367,000 |
Stock compensation |  |  | 786,000 |  |  |  | 767,000 |
Nonaccrual loan interest income |  |  | 623,000 |  |  |  | 602,000 |
Deferred loan fees |  |  | 496,000 |  |  |  | 504,000 |
Capital loss carryforward |  |  | 157,000 |  |  |  | 270,000 |
Fair value write-downs on foreclosed properties |  |  | 24,000 |  |  |  | 115,000 |
Fair value of interest rate swap |  |  | 30,000 |  |  |  | 89,000 |
Unrealized loss on securities |  |  | 2,976,000 |  |  |  | 0 |
Other |  |  | 408,000 |  |  |  | 283,000 |
Deferred tax asset before valuation allowance |  |  | 12,961,000 |  |  |  | 9,485,000 |
Valuation allowance |  |  | (157,000 | ) |  |  | (270,000 | )
Deferred tax asset after valuation allowance |  |  | 12,804,000 |  |  |  | 9,215,000 |
Deferred income tax liabilities |  |  |  |  |  |  |  |
Depreciation |  |  | 928,000 |  |  |  | 1,128,000 |
Prepaid expenses |  |  | 463,000 |  |  |  | 378,000 |
Core deposit intangible |  |  | 3,423,000 |  |  |  | 4,349,000 |
Mortgage loan servicing rights |  |  | 1,940,000 |  |  |  | 2,142,000 |
Unrealized gain on securities |  |  | 0 |  |  |  | 768,000 |
Business combination adjustments |  |  | 2,183,000 |  |  |  | 1,091,000 |
Other |  |  | 199,000 |  |  |  | 188,000 |
Deferred tax liability |  |  | 9,136,000 |  |  |  | 10,044,000 |
Total net deferred tax asset (liability) |  | $ | 3,668,000 |  |  | $ | (829,000 | )
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, 2016 and 2015, we carried a valuation allowance of $0.2 million and $0.3 million, respectively, against capital loss carryforwards generated by the disposal of certain capital investments acquired in our merger with Firstbank. During 2016 and 2015, we reversed $0.1 million and $0.2 million, respectively, of the valuation allowance due to generation of capital gains during the year. The remaining $0.5 million of capital loss carryforwards will expire at December 31, 2020 and we continue to carry a valuation allowance against the related deferred tax asset. We believe the remainder of our deferred tax assets is more likely than not to be realized. We had no unrecognized tax benefits at any time during 2016 or 2015 and do not anticipate any significant increase in unrecognized tax benefits during 2017. 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 2016 or 2015. Our U.S. federal income tax returns are no longer subject to examination for all years before 2013.

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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=65882285&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=65882285&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=65882285&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=65882285&loc=d3e32537-109319 + Details
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