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Note 14 - Income Taxes | 12 Months Ended
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Dec. 31, 2023
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note 14. Income Taxes Income tax expense is comprised of current and deferred, federal and state income taxes on the Company’s pre-tax earnings. The following table presents the components of the income tax provision for the periods indicated:
|  | Year Ended December 31, |
(Amounts in thousands) |  | 2023 |  |  | 2022 |  |  | 2021 |
Current tax expense: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 11,055 |  |  | $ | 9,883 |  |  | $ | 8,546 |
State |  |  | 1,553 |  |  |  | 1,648 |  |  |  | 1,563 |
Total current tax expense |  |  | 12,608 |  |  |  | 11,531 |  |  |  | 10,109 |
Deferred tax expense: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 1,166 |  |  |  | 1,800 |  |  |  | 4,677 |
State |  |  | 180 |  |  |  | 164 |  |  |  | 574 |
Total deferred tax expense |  |  | 1,346 |  |  |  | 1,964 |  |  |  | 5,251 |
Total income tax expense |  | $ | 13,954 |  |  | $ | 13,495 |  |  | $ | 15,360 |
The Company’s effective tax rate, income tax as a percent of pre-tax income, may vary significantly from the statutory rate due to permanent differences and available tax credits. Permanent differences are income and expense items excluded by law in the calculation of taxable income. The Company’s most significant permanent differences generally include interest income on municipal securities and increases in the cash surrender value of life insurance policies. The following table reconciles the Company’s income tax expense to the amount computed by applying the federal statutory tax rate to pre-tax income for the periods indicated:
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
|  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |  |  | Amount |  |  | Percent |
(Amounts in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal income tax at the statutory rate |  | $ | 13,014 |  |  |  | 21.00 | % |  | $ | 12,633 |  |  |  | 21.00 | % |  | $ | 13,971 |  |  |  | 21.00 | %
State income tax, net of federal benefit |  |  | 1,368 |  |  |  | 2.21 | % |  |  | 1,432 |  |  |  | 2.38 | % |  |  | 2,076 |  |  |  | 3.12 | %
|  |  | 14,382 |  |  |  | 23.21 | % |  |  | 14,065 |  |  |  | 23.38 | % |  |  | 16,047 |  |  |  | 24.12 | %
Increase (decrease) resulting from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt interest income |  |  | (348 | ) |  |  | (0.56 | )% |  |  | (347 | ) |  |  | (0.58 | )% |  |  | (340 | ) |  |  | (0.51 | )%
Excess tax benefits |  |  | (25 | ) |  |  | (0.04 | )% |  |  | (24 | ) |  |  | (0.04 | )% |  |  | (133 | ) |  |  | (0.20 | )%
Bank owned life insurance |  |  | (167 | ) |  |  | (0.27 | )% |  |  | (68 | ) |  |  | (0.11 | )% |  |  | (225 | ) |  |  | (0.34 | )%
Other items, net |  |  | 112 |  |  |  | 0.17 | % |  |  | (131 | ) |  |  | (0.22 | )% |  |  | 11 |  |  |  | 0.02 | %
Income tax at the effective tax rate |  | $ | 13,954 |  |  |  | 22.51 | % |  | $ | 13,495 |  |  |  | 22.43 | % |  | $ | 15,360 |  |  |  | 23.09 | %
Deferred taxes derived from continuing operations reflect the net effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for tax purposes. The following table presents the significant components of the net deferred tax asset as of the dates indicated:
|  | December 31, |
(Amounts in thousands) |  | 2023 |  |  | 2022 |
Deferred tax assets |  |  |  |  |  |  |  |
Allowance for credit losses |  | $ | 8,523 |  |  | $ | 7,283 |
Unrealized losses on available-for-sale securities |  |  | 2,958 |  |  |  | 4,153 |
Unrealized asset losses |  |  | 420 |  |  |  | 503 |
Purchase accounting |  |  | — |  |  |  | 148 |
FDIC assisted transactions |  |  | 346 |  |  |  | 588 |
Deferred loan fees |  |  | 4,674 |  |  |  | 2,074 |
Deferred compensation assets |  |  | 6,316 |  |  |  | 5,035 |
Federal net operating loss carryforward |  |  | 266 |  |  |  | 1,223 |
Lease liability |  |  | 146 |  |  |  | 160 |
Accrued litigation |  |  | 824 |  |  |  | — |
Other |  |  | 831 |  |  |  | 707 |
Total deferred tax assets |  |  | 25,304 |  |  |  | 21,874 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Fixed assets |  |  | (939 | ) |  |  | (755 | )
Intangible assets |  |  | (4,303 | ) |  |  | (857 | )
Odd days interest deferral |  |  | (4,134 | ) |  |  | (4,010 | )
Purchase accounting |  |  | (81 | ) |  |  | — |
Right of use asset |  |  | (140 | ) |  |  | (155 | )
Other |  |  | (869 | ) |  |  | (197 | )
Total deferred tax liabilities |  |  | (10,466 | ) |  |  | (5,974 | )
Net deferred tax asset |  | $ | 14,838 |  |  | $ | 15,900 |
The Company had no unrecognized tax benefits or accrued interest or penalties as of December 31, 2023 or 2022. The Company had no deferred tax valuation allowance recorded as of December 31, 2023 or 2022, as management believes it is more likely than not that all of the deferred tax assets will be realized against deferred tax liabilities and projected future taxable income. The Company and its subsidiaries are subject to U.S. federal income tax of the various states. The Company is no longer subject to examination by federal or state taxing authorities for years before 2020. At December 31, 2023, the Company had Federal net operating loss carryforwards of approximately $1.27 million of which $796 thousand can be carried forward 20 years with expiration occurring no earlier than 2036, and $470 thousand that can be carried forward indefinitely. During 2023, the Company acquired $1.46 million of Federal net operating loss carryforwards and these will be utilized during the current year. The Company has analyzed the tax positions taken, or expected to be taken in its tax returns, and concluded it has no liability related to uncertain tax positions.

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