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Note 13 - Income Taxes | 12 Months Ended
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Dec. 31, 2018
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
13. | INCOME TAXES
The provision for federal income taxes for the years ended December 31, consists of:
(Dollar amounts in thousands) |  | 2018 |  |  | 2017 |
Current payable |  | $ | 2,403 |  |  | $ | 3,929 |
Deferred |  |  | (241 | ) |  |  | 293 |
Total provision |  | $ | 2,162 |  |  | $ | 4,222 |
The tax effects of deductible and taxable temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows at December 31,:
(Dollar amounts in thousands) |  | 2018 |  |  | 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for loan and lease losses |  | $ | 1,327 |  |  | $ | 1,210 |
Supplemental retirement plan |  |  | 454 |  |  |  | 528 |
Investment security basis adjustment |  |  | 18 |  |  |  | 18 |
Nonaccrual interest income |  |  | 389 |  |  |  | 371 |
OREO adjustments |  |  | - |  |  |  | 2 |
Accrued compensation |  |  | 222 |  |  |  | 201 |
Other |  |  | - |  |  |  | 86 |
Gross deferred tax assets |  |  | 2,410 |  |  |  | 2,416 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Premises and equipment |  |  | 328 |  |  |  | 356 |
Net unrealized gain on securities |  |  | 1 |  |  |  | 347 |
FHLB stock dividends |  |  | 139 |  |  |  | 139 |
Intangibles |  |  | 342 |  |  |  | 307 |
Mortgage servicing rights |  |  | 75 |  |  |  | 71 |
Deferred origination fees, net |  |  | 13 |  |  |  | 294 |
Acquisition fair value adjustments |  |  | 275 |  |  |  | 250 |
Other |  |  | 5 |  |  |  | 5 |
Gross deferred tax liabilities |  |  | 1,178 |  |  |  | 1,769 |
Net deferred tax assets |  | $ | 1,232 |  |  | $ | 647 |
No valuation allowance was established at December 31, 2018 and 2017, in view of the Company’s ability to carry back to taxes paid in previous years and certain tax strategies, coupled with the anticipated future taxable income as evidenced by the Company's earnings potential. The reconciliation between the federal statutory rate and the Company’s effective consolidated income tax rate for the years ended December 31, is as follows:
(Dollar amounts in thousands) |  | 2018 |  |  | 2017 |
|  |  |  |  |  | % of |  |  |  |  |  |  | % of |
|  |  |  |  |  | Pretax |  |  |  |  |  |  | Pretax |
|  | Amount |  |  | Income |  |  | Amount |  |  | Income |
Provision at statutory rate |  | $ | 3,065 |  |  |  | 21.0 | % |  | $ | 4,651 |  |  |  | 34.0 | %
Tax-exempt income |  |  | (622 | ) |  |  | (4.3 | )% |  |  | (1,045 | ) |  |  | (7.6 | )%
Nondeductible interest expense |  |  | 27 |  |  |  | 0.2 | % |  |  | 32 |  |  |  | 0.2 | %
Nondeductible merger-related expenses |  |  | - |  |  |  | - | % |  |  | 43 |  |  |  | 0.3 | %
Stock-based compensation |  |  | (37 | ) |  |  | (0.3 | )% |  |  | (50 | ) |  |  | -0.4 | %
Change in effective corporate tax rate |  |  | - |  |  |  | - | % |  |  | 401 |  |  |  | 2.9 | %
Other |  |  | (271 | ) |  |  | (1.8 | )% |  |  | 190 |  |  |  | 1.5 | %
Actual tax expense and effective rate |  | $ | 2,162 |  |  |  | 14.8 | % |  | $ | 4,222 |  |  |  | 30.9 | %
ASC 740 - 10 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than- not recognition threshold is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than- not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than- not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. On December 22, 2017, H.R.1, commonly known as the Tax Cuts and Jobs Act (the “Act”), was signed into law. The Act includes many provisions that affected our income tax expense, including reducing our federal tax rate from 34% to 21% effective January 1, 2018. As a result of the rate reduction, we were required to re-measure, through income tax expense in the period of enactment, our deferred tax assets and liabilities using the enacted rate at which we expect them to be recovered or settled. The re-measurement of our net deferred tax asset resulted in additional 2017 income tax expense of $401 thousand. Also on December 22, 2017, the U.S. Securities and Exchange Commission (“SEC”) released Staff Accounting Bulletin No. 118 (“SAB 118” ) to address any uncertainty or diversity of views in practice in accounting for the income tax effects of the Act in situations where a registrant did not have the necessary information available, prepared, or analyzed in reasonable detail to complete this accounting in the reporting period that includes the enactment date. SAB 118 allowed for a measurement period not to extend beyond one year from the Act’s enactment date to complete the necessary accounting. At December 31, 2018 and December 31, 2017, the Company had no ASC 740 - 10 unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next 12 months. The Company recognizes interest and penalties on unrecognized tax benefits as a component of income tax expense. The Company and the Bank are subject to U.S. federal income tax as well as an income tax in the states of Ohio and Florida, and the Bank is subject to a capital-based franchise tax in the state of Ohio. The Company and the Bank are no longer subject to examination by taxing authorities for years before December 31, 2015.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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