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Income Taxes
 12 Months Ended
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.