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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

Note 11 – Income Taxes

The components of income tax expense for the years ended December 31 are as follows:

 

 

 

(In Thousands)

 

 

 

2024

 

 

2023

 

 

2022

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

6,144

 

 

$

3,052

 

 

$

7,430

 

State

 

 

184

 

 

 

287

 

 

 

359

 

Total current

 

 

6,328

 

 

 

3,339

 

 

 

7,789

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

271

 

 

 

2,182

 

 

 

227

 

State

 

 

36

 

 

 

46

 

 

 

(56

)

Total deferred

 

 

307

 

 

 

2,228

 

 

 

171

 

Total Income Tax

 

$

6,635

 

 

$

5,567

 

 

$

7,960

 

 

The following is a reconciliation of the statutory federal income tax rate to the effective tax rate:

 

 

 

(In Thousands)

 

 

 

2024

 

 

2023

 

 

2022

 

Federal income tax at statutory rates

 

$

6,840

 

 

$

5,954

 

 

$

8,489

 

(Decrease) increase resulting from:

 

 

 

 

 

 

 

 

 

State income tax, net of federal benefit

 

 

174

 

 

 

264

 

 

 

239

 

Tax exempt interest

 

 

(106

)

 

 

(129

)

 

 

(133

)

Investments reported under proportional amortization method

 

 

65

 

 

 

-

 

 

 

-

 

Section 831 deduction

 

 

-

 

 

 

(187

)

 

 

(270

)

Other

 

 

(338

)

 

 

(335

)

 

 

(365

)

Total Income Tax

 

$

6,635

 

 

$

5,567

 

 

$

7,960

 

 

Deferred tax assets and liabilities at December 31 are comprised of the following:

 

 

 

(In Thousands)

 

 

 

2024

 

 

2023

 

Deferred Tax Assets:

 

 

 

 

 

 

Allowance for credit losses

 

$

6,009

 

 

$

5,888

 

Deferred compensation

 

 

578

 

 

 

547

 

Net unrealized loss on available-for-sale securities

 

 

6,705

 

 

 

7,712

 

Fair value adjustments

 

 

623

 

 

 

1,179

 

Other

 

 

58

 

 

 

307

 

Total deferred tax assets

 

 

13,973

 

 

 

15,633

 

Deferred Tax Liabilities:

 

 

 

 

 

 

Accreted discounts on bonds

 

 

169

 

 

 

95

 

Depreciation

 

 

2,066

 

 

 

2,409

 

FHLB stock dividends

 

 

762

 

 

 

880

 

Intangible amortization

 

 

2,178

 

 

 

2,421

 

Loan servicing rights

 

 

1,247

 

 

 

1,252

 

Prepaids

 

 

560

 

 

 

244

 

Other

 

 

462

 

 

 

488

 

Total deferred tax liabilities

 

 

7,444

 

 

 

7,789

 

Net Deferred Tax Asset

 

$

6,529

 

 

$

7,844

 

 

 

 

For the years ended December 31, 2024 and 2023, all state income taxes were paid to the State of Indiana.

 

The Peoples Federal Savings and Loan acquisition included a net operating loss (NOL) carryforward of approximately $2.8 million that had a remaining balance of $1.4 million and $2.0 million at December 31, 2024 and 2023, respectively.

 

The Company has additional paid-in capital that is considered restricted resulting from the acquisition of Perpetual in 2021 of approximately $2.8 million and from the acquisition of Peoples in 2022 of approximately $2.2 million. No deferred tax liability is required to be recorded for the Company’s tax bad debt reserves arising before December 31, 1987, unless it is apparent that the reserves will reverse in the near future. Unrecognized deferred taxes on these reserves would total $1.0 million. If the portion of retained earnings representing these reserves is used for any purpose other than to absorb bad debts, it will be added to future taxable income and the related tax will be recognized as expense.