XML 33 R20.htm IDEA: XBRL DOCUMENT v3.21.1
Note 11 - Income Taxes
 12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 11 – Income Taxes

 

Information as of December 31 and for the year follows:

 

(Dollars in thousands)

            
  

2020

  

2019

  

2018

 

Provision for Income Taxes

            

Current federal income tax expense

 $3,070  $984  $946 

Deferred federal income tax expense/(benefit)

  202   310   209 

Income tax expense

 $3,272  $1,294  $1,155 
             

Reconciliation of Income Tax Provision to Statutory Rate

            

Income tax computed at statutory federal rate of 21%

 $3,966  $1,778  $1,783 

Tax exempt interest income

  (574)  (320)  (309)

Tax exempt earnings on bank-owned life insurance

  (162)  (162)  (81)

Tax credits

  (240)  (218)  (154)

Nondeductible merger expenses

  182   164   - 

Other items

  100   52   (84)

Income tax expense

 $3,272  $1,294  $1,155 
             

Effective income tax rate

  17

%

  15

%

  14

%

 

(Dollars in thousands)

        
         

Components of Deferred Tax Assets and Liabilities

 

2020

  

2019

 

Deferred tax assets:

        
Purchase accounting adjustments from mergers with County        
and Community Shores $1,953  $1,129 

Allowance for loan losses

  1,595   585 

Net operating loss carryforward

  851   - 

Deferred loan fees

  466   301 

Write-downs of other real estate owned

  326   169 

Other

  380   198 

Total deferred tax assets

  5,571   2,382 
         

Deferred tax liabilities:

        

Unrealized gains on securities available for sale

  2,931   360 
Purchase accounting adjustments from mergers with County        
and Community Shores  1,403   1,285 

Loan servicing rights

  833   447 

Depreciation

  653   778 

Interest rate lock commitments

  177   14 

Other

  230   221 

Total deferred tax liabilities

  6,227   3,105 

Net deferred tax liability

 $(656) $(723)

 

As of December 31, 2020, deferred tax assets included federal net operating loss carryforwards of approximately $4.1 million which was acquired through the merger with Community Shores.  The loss carryforwards expire at various dates from 2032 to 2036.  Deferred tax assets are recognized for net operating losses because the benefit is more likely than not to be realized.  Under Internal Revenue Service limitations, ChoiceOne is limited to applying approximately $185,000 of net operating losses per year.