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INCOME TAXES

12 Months Ended

Dec. 31, 2024

INCOME TAXES

INCOME TAXES

NOTE 9.           INCOME TAXES

The following table summarizes the current and deferred components of income tax expense (benefit) for each of the years ended December 31, 2024, 2023 and 2022:

​

​	​	​	​	​	​	​	​	​	​
(in thousands)		2024			2023			2022
Current:		​			​			​
Federal tax expense	​	$	7,688	​	$	10,704	​	$	10,444
State tax expense	​		1,748	​		2,247	​		1,551
Total current tax expense	​		9,436	​		12,951	​		11,995
​	​	​	​	​	​	​	​	​	​
Deferred tax (benefit) expense	​		(366)	​		(686)	​		(707)
Total income tax expense	​	$	9,070	​	$	12,265	​	$	11,288

​

The following table reconciles the expected federal income tax expense (computed by applying the federal statutory tax rate of 21%) to recorded income tax expense for the years ended December 31, 2024, 2023 and 2022:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	2024				​	2023				​	2022
(in thousands, except ratios)	​	Amount		​	Rate	​	Amount		​	Rate	​	Amount		​	Rate
Statutory tax rate		$	11,049		21.00	%	$	11,995		21.00	%	$	11,517		21.00	%
Increase (decrease) resulting from:		​			​		​			​		​			​
State taxes, net of federal benefit		​	1,287		2.45		​	1,539		2.69		​	1,477		2.69
Tax exempt interest		​	(1,405)		(2.67)		​	(1,042)		(1.82)		​	(1,003)		(1.83)
Federal tax credits		​	(239)		(0.45)		​	(471)		(0.82)		​	(241)		(0.44)
Officers' life insurance		​	(416)		(0.79)		​	(578)		(1.01)		​	(498)		(0.91)
Gain on disposal of low income housing tax credit investments		​	—		—		​	—		—		​	—		—
Stock-based compensation plans		​	(37)		(0.07)		​	17		0.03		​	(16)		(0.03)
Other		​	(1,169)	​	(2.22)		​	805		1.40		​	52		0.10
Effective tax rate	​	$	9,070		17.25	%	$	12,265		21.47	%	$	11,288		20.58	%

​

The net deferred tax asset was $23.3 million at December 31, 2024 and $23.0 million at December 31, 2023.

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023 are summarized below:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	2024					​	2023
(in thousands)	​	Assets		​	Liabilities		​	Assets		​	Liabilities
Allowance for credit losses		$	6,872		$	—		$	6,593		$	—
Deferred compensation	​		3,941	​		—	​		3,678	​		—
Unrealized gain or loss on securities available for sale	​		14,557	​		—	​		14,702	​		—
Unrealized gain or loss on derivatives	​		786	​		—	​		312	​		—
Depreciation	​		—	​		1,403	​		—	​		1,101
Deferred loan origination fees, net	​		13	​		—	​		—	​		129
Non-accrual interest	​		731	​		—	​		632	​		—
Branch acquisition costs and goodwill	​		—	​		2,363	​		—	​		1,987
Core deposit intangible	​		—	​		547	​		—	​		689
Acquisition fair value adjustments	​		260	​		—	​		232	​		—
Prepaid expenses	​		—	​		287	​		—	​		297
Mortgage servicing rights	​		—	​		738	​		—	​		741
Equity compensation	​		1,269	​		—	​		1,016	​		—
Prepaid pension	​		—	​		673	​		—	​		669
Contract incentives	​		391	​		—	​		564	​		—
Right of use asset	​		—	​		2,053	​		—	​		1,611
Lease liability	​		2,209	​		—	​		1,716	​		—
Other	​		365	​		—	​		758	​		—
Total	​	$	31,394	​	$	8,064	​	$	30,203	​	$	7,224

​

The Company has determined that a valuation allowance is not required for its net deferred tax asset since it is more likely than not that this asset is realizable principally through future taxable income and future reversal of existing temporary differences.

GAAP requires the measurement of unrecorded tax benefits related to uncertain tax positions. An unrecorded tax benefit is the difference between the tax benefit of a position taken, or expected to be taken on a tax return and the benefit recorded for accounting purposes. At December 31, 2024 and 2023, we had no unrecorded tax benefits and do not expect our position to significantly change within the next 12 months.

We are subject to income tax in the U.S. federal jurisdiction and also in the states of Maine, New Hampshire, Massachusetts and various other states. We are no longer subject to examination by taxing authorities for years before 2021.

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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.

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