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Income Taxes
 12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]  
Income Taxes

Note 11 – Income Taxes

 

Information as of December 31 and for the year follows:

 

(Dollars in thousands)         
    2014    2013    2012 
Provision for Income Taxes               
Current federal income tax expense  $2,536   $1,724   $1,475 
Deferred federal income tax expense/(benefit)   (460)   59    (132)
    Income tax expense  $2,076   $1,783   $1,343 
                
Reconciliation of Income Tax Provision to Statutory Rate               
Income tax computed at statutory federal rate of 34%  $2,642   $2,338   $1,906 
Tax exempt interest income   (475)   (476)   (466)
Tax exempt earnings on bank-owned life insurance   (103)   (101)   (152)
Other items   12    22    55 
    Income tax expense  $2,076   $1,783   $1,343 
                
Effective income tax rate    27 %    26%   24% 

 

 

(Dollars in thousands)      
       
Components of Deferred Tax Assets and Liabilities  2014    2013
Deferred tax assets:      
    Allowance for loan losses  $1,151   $1,075 
    Deferred compensation   295    316 
    Write-downs on other real estate owned   —    119 
Loan costs/fees deferred   84    95 
    Other   172    119 
          Total deferred tax assets   1,702    1,724 

 

Deferred tax liabilities:        
     Depreciation     1,158       1,279  
     Unrealized gains on securities available for sale     476       —  
     Purchase accounting adjustments from merger     258       462  
     Loan servicing rights     166       185  
     Stock dividends received from Federal Home Loan Bank     64       83  
     Post-retirement benefits obligation     77       82  
     Other     70       132  
          Total deferred tax liabilities     2,269       2,223  
          Net deferred tax liabilities   $ 567     $ 499  

 

ChoiceOne had a deferred tax asset of $18,000 as of December 31, 2014 and $42,000 as of December 31, 2013 that resulted from capital losses incurred on the sales of equity securities in 2009 and 2010. A valuation allowance of $18,000 and $42,000, respectively, had been recorded as of December 31, 2014 and December 31, 2013 due to the uncertainty as to ChoiceOne’s ability to generate capital gains in the future that can offset the capital loss carryforward. ChoiceOne also had a deferred tax asset of $23,000 and $44,000, respectively, as of December 31, 2014 and December 31, 2013 that was related to unexercised stock options. A valuation allowance for the entire balance had been recorded as of December 31, 2014 and December 31, 2013 due to the uncertainty as to whether the options would be exercised. The valuation allowances totaling $41,000 and $86,000, respectively, as of December 31, 2014 and December 31, 2013 have been netted against the total deferred tax assets listed above.