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Note 14 - Income Taxes
 12 Months Ended
Dec. 31, 2024
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)

 

2024

  

2023

  

2022

 

Current tax expense:

            

Federal

 $11,070  $11,055  $9,883 

State

  1,173   1,553   1,648 

Total current tax expense

  12,243   12,608   11,531 
             

Deferred tax expense:

            

Federal

  1,624   1,166   1,800 

State

  223   180   164 

Total deferred tax expense

  1,847   1,346   1,964 

Total income tax expense

 $14,090  $13,954  $13,495 

 

 

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,

 
  

2024

  

2023

  

2022

 
  

Amount

  

Percent

  

Amount

  

Percent

  

Amount

  

Percent

 

(Amounts in thousands)

                        

Federal income tax at the statutory rate

 $13,796   21.00% $13,014   21.00% $12,633   21.00%

State income tax, net of federal benefit

  1,102   1.68%  1,368   2.21%  1,432   2.38%
   14,898   22.68%  14,382   23.21%  14,065   23.38%

Increase (decrease) resulting from:

                        

Tax-exempt interest income

  (351)  (0.54)%  (348)  (0.56)%  (347)  (0.58)%

Excess tax benefits

  (104)  (0.16)%  (25)  (0.04)%  (24)  (0.04)%

Bank owned life insurance

  (227)  (0.35)%  (167)  (0.27)%  (68)  (0.11)%

Other items, net

  (126)  (0.19)%  112   0.17%  (131)  (0.22)%

Income tax at the effective tax rate

 $14,090   21.44% $13,954   22.51% $13,495   22.43%

 

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)

 

2024

  

2023

 

Deferred tax assets

        

Allowance for credit losses

 $8,193  $8,523 

Unrealized losses on available-for-sale securities

  3,116   2,958 

Unrealized asset losses

  329   420 

FDIC assisted transactions

  333   346 

Deferred loan fees

  3,978   4,674 

Deferred compensation assets

  6,918   6,316 

Federal net operating loss carryforward

  —   266 

Lease liability

  121   146 

Accrued litigation

  83   824 

Other

  1,200   831 

Total deferred tax assets

  24,271   25,304 
         

Deferred tax liabilities

        

Fixed assets

  (1,332)  (939)

Intangible assets

  (4,671)  (4,303)

Odd days interest deferral

  (3,874)  (4,134)

Purchase accounting

  (31)  (81)

Right of use asset

  (115)  (140)

Other

  (1,197)  (869)

Total deferred tax liabilities

  (11,220)  (10,466)

Net deferred tax asset

 $13,051  $14,838 

 

The Company had no unrecognized tax benefits or accrued interest or penalties as of December 31, 2024 or 2023. The Company had no deferred tax valuation allowance recorded as of December 31, 2024 or 2023, 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 2021.

 

At  December 31, 2024, the Company had no federal or state net operating loss carryforwards. 

 

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.