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Note 13 - Income Taxes
 12 Months Ended
Dec. 31, 2024
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)

 

2024

  

2023

 
         

Current payable

 $2,627  $4,092 

Deferred

  198   (705)
         

Total provision

 $2,825  $3,387 

 

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)

 

2024

  

2023

 
         

Deferred tax assets:

        

Allowance for credit losses

 $4,714  $4,469 

Supplemental retirement plan

  839   959 

Investment security basis adjustment

  18   18 

Nonaccrual interest income

  533   387 

Accrued compensation

  443   494 

Deferred origination fees, net

  -   878 

Net unrealized loss on AFS securities

  5,336   4,277 

Lease liability

  802   111 

Acquisition fair value adjustments

  64   77 

Other

  394   374 

Gross deferred tax assets

  13,143   12,044 
         

Deferred tax liabilities:

        

Premises and equipment

  1,041   961 

Deferred origination fees, net

  268   - 

Net unrealized gain on equity securities

  19   27 

FHLB stock dividends

  64   115 

Intangibles

  478   478 

Mortgage servicing rights

  314   344 

Right of use assets

  758   843 

Other

  103   39 

Gross deferred tax liabilities

  3,045   2,807 
         

Net deferred tax assets

 $10,098  $9,237 

 

No valuation allowance was established on December 31, 2024, and 2023, in view of the Company’s 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:

 

 

 

2024

  

2023

 
      

% of

      

% of

 
      

Pretax

      

Pretax

 
(Dollar amounts in thousands) 

Amount

  

Income

  

Amount

  

Income

 
                 
                 

Provision at statutory rate

 $3,852   21.0% $4,358   21.0%

Tax-exempt income

  (1,088)  (5.9)%  (1,044)  (5.0)%

Nondeductible interest expense

  42   0.2%  22   0.1%

Other

  19   0.1%  51   0.1%

Actual tax expense and effective rate

 $2,825   15.4% $3,387   16.2%

 

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.

 

At December 31, 2024 and 2023, 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 other expense.

 

The Company and the Bank are subject to U.S. federal income tax as well as an income tax in the state of 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, 2021.