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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Note 12 – Income Taxes Information as of December 31 and for the year follows:
(Dollars in thousands) |  |  |  |  |  |  |  |  |  |
|  | 2024 |  |  | 2023 |  |  | 2022 |  |
Provision for Income Taxes |  |  |  |  |  |  |  |  |  |
Current federal income tax expense |  | $ | 6,633 |  |  | $ | 4,330 |  |  | $ | 4,033 |  |
Deferred federal income tax expense/(benefit) |  |  | (271 | ) |  |  | (24 | ) |  |  | (15 | ) |
Income tax expense |  | $ | 6,362 |  |  | $ | 4,306 |  |  | $ | 4,018 |  |
Reconciliation of Income Tax Provision to Statutory Rate |  |  |  |  |  |  |  |  |  |
Income tax computed at statutory federal rate of 21% |  | $ | 6,949 |  |  | $ | 5,369 |  |  | $ | 5,808 |  |
Tax exempt interest income |  |  | (1,214 | ) |  |  | (1,206 | ) |  |  | (1,323 | ) |
Tax exempt earnings on bank-owned life insurance |  |  | (406 | ) |  |  | (230 | ) |  |  | (276 | ) |
Tax credits |  |  | (264 | ) |  |  | (282 | ) |  |  | (289 | ) |
Disallowed interest expense |  |  | 1,061 |  |  |  | 752 |  |  |  | 179 |  |
Nondeductible merger expenses |  |  | 185 |  |  |  | - |  |  |  | - |  |
Other items |  |  | 51 |  |  |  | (97 | ) |  |  | (81 | ) |
Income tax expense |  | $ | 6,362 |  |  | $ | 4,306 |  |  | $ | 4,018 |  |
Effective income tax rate |  |  | 19 | % |  |  | 17 | % |  |  | 15 | % |
(Dollars in thousands) |  |  |  |  |  |
Components of Deferred Tax Assets and Liabilities |  | 2024 |  |  | 2023 |
Deferred tax assets: |  |  |  |  |  |
Purchase accounting adjustments from mergers with County and Community Shores |  | $ | 273 |  |  | $ | 529 |
Allowance for credit losses |  |  | 3,476 |  |  |  | 3,294 |
Unrealized losses on securities available for sale |  |  | 14,942 |  |  |  | 15,279 |
Net operating loss carryforward |  |  | 427 |  |  |  | 466 |
Unfunded commitment reserve |  |  | 312 |  |  |  | 454 |
Compensation |  |  | 816 |  |  |  | 588 |
Other |  |  | 658 |  |  |  | 520 |
Total deferred tax assets |  |  | 20,904 |  |  |  | 21,130 |
Deferred tax liabilities: |  |  |  |  |  |
Purchase accounting adjustments from mergers with County and Community Shores |  |  | 442 |  |  |  | 622 |
Loan servicing rights |  |  | 709 |  |  |  | 805 |
Depreciation |  |  | 637 |  |  |  | 534 |
Interest rate derivative contracts |  |  | 4,900 |  |  |  | 1,568 |
Deferred loan fees and costs, net |  |  | 67 |  |  |  | 75 |
Other |  |  | 384 |  |  |  | 363 |
Total deferred tax liabilities |  |  | 7,139 |  |  |  | 3,967 |
Net deferred tax asset (liability) |  | $ | 13,765 |  |  | $ | 17,163 |
As of December 31, 2024, deferred tax assets included federal net operating loss carryforwards of approximately $2.0 million which were acquired through the merger with Community Shores. The loss carryforwards expire at various dates from 2031 to 2035. Deferred tax assets are recognized for net operating losses because the benefit is more likely than not to be realized. Under Internal Revenue Code Section 382, ChoiceOne is limited to applying approximately $185,000 of net operating losses per year. The Company and its subsidiaries file federal income tax returns in the United States. The Company is generally no longer subject to U. S. federal income tax examinations by tax authorities for tax years before 2021.

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