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Note 10 - Federal Income Taxes | 12 Months Ended
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Dec. 31, 2022
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | NOTE 10 - FEDERAL INCOME TAXES The consolidated income tax expense is as follows:
|  | 2022 |  |  | 2021 |  |  | 2020 |
Current expense |  | $ | 16,080,000 |  |  | $ | 12,675,000 |  |  | $ | 14,945,000 |
Deferred expense |  |  | (1,353,000 | ) |  |  | 2,020,000 |  |  |  | (4,141,000 | )
Change in valuation allowance |  |  | 0 |  |  |  | 0 |  |  |  | (94,000 | )
Tax expense |  | $ | 14,727,000 |  |  | $ | 14,695,000 |  |  | $ | 10,710,000 |
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:
|  | 2022 |  |  | 2021 |  |  | 2020 |
Tax at statutory rate |  | $ | 15,915,000 |  |  | $ | 15,481,000 |  |  | $ | 11,518,000 |
Increase (decrease) from |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt interest |  |  | (695,000 | ) |  |  | (658,000 | ) |  |  | (681,000 | )
Bank owned life insurance |  |  | (334,000 | ) |  |  | (233,000 | ) |  |  | (238,000 | )
Change in valuation allowance |  |  | 0 |  |  |  | 0 |  |  |  | (94,000 | )
Other |  |  | (159,000 | ) |  |  | 105,000 |  |  |  | 205,000 |
Tax expense |  | $ | 14,727,000 |  |  | $ | 14,695,000 |  |  | $ | 10,710,000 |
The statutory tax rate was 21% for 2022, 2021 and 2020. Significant components of deferred tax assets and liabilities, included in other assets on our Consolidated Balance Sheets, as of December 31, 2022 and 2021 are as follows:
|  | 2022 |  |  | 2021 |
Deferred income tax assets |  |  |  |  |  |  |  |
Allowance for credit losses |  | $ | 8,872,000 |  |  | $ | 7,426,000 |
Deferred compensation |  |  | 232,000 |  |  |  | 259,000 |
Stock compensation |  |  | 1,018,000 |  |  |  | 941,000 |
Nonaccrual loan interest income |  |  | 136,000 |  |  |  | 159,000 |
Unrealized loss on securities |  |  | 17,369,000 |  |  |  | 991,000 |
Lease liability |  |  | 810,000 |  |  |  | 749,000 |
Deferred loan fees and costs |  |  | 0 |  |  |  | 520,000 |
Other |  |  | 494,000 |  |  |  | 595,000 |
Deferred tax asset |  |  | 28,931,000 |  |  |  | 11,640,000 |
Deferred income tax liabilities |  |  |  |  |  |  |  |
Depreciation |  |  | 697,000 |  |  |  | 1,168,000 |
Prepaid expenses |  |  | 504,000 |  |  |  | 416,000 |
Core deposit intangible |  |  | 120,000 |  |  |  | 276,000 |
Mortgage loan servicing rights |  |  | 2,486,000 |  |  |  | 2,572,000 |
Deferred loan fees and costs |  |  | 211,000 |  |  |  | 0 |
Right of use lease asset |  |  | 810,000 |  |  |  | 749,000 |
Business combination adjustments |  |  | 1,877,000 |  |  |  | 2,013,000 |
Other |  |  | 326,000 |  |  |  | 193,000 |
Deferred tax liability |  |  | 7,031,000 |  |  |  | 7,387,000 |
Total net deferred tax asset |  | $ | 21,900,000 |  |  | $ | 4,253,000 |
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. We determined that no valuation allowance was required at year-end 2022 or 2021. We had no unrecognized tax benefits at any time during 2022 or 2021 and do not anticipate any significant increase in unrecognized tax benefits during 2023. 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 2022 or 2021. Our U.S. federal income tax returns are no longer subject to examination for all years before 2019.

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