XML 37 R23.htm IDEA: XBRL DOCUMENT v3.25.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES

Note 14—INCOME TAXES

Income tax expense for the years ended December 31, 2024, 2023 and 2022 consists of the following:

 

   Year ended December 31 
(Dollars in thousands)  2024   2023   2022 
Current               
Federal  $3,576   $2,937   $3,429 
State   219    627    735 
Total Current   3,795    3,564    4,164 
Deferred               
Federal   71    (327)   (323)
State   (51)   (40)   (43)
Total Deferred   20    (367)   (366)
Income tax expense  $3,815   $3,197   $3,798 

 

Reconciliation from expected federal tax expense to effective income tax expense for the periods indicated are as follows:  

 

   Year ended December 31 
(Dollars in thousands)  2024   2023   2022 
Expected federal income tax expense  $3,732   $3,159   $3,866 
State income tax net of federal benefit   133    464    547 
Tax exempt interest   (195)   (275)   (404)
Increase in cash surrender value life insurance   (168)   (176)   (151)
Valuation allowance   64    93    27 
Life Insurance Proceeds   —    (19)   — 
Excess tax benefit of stock compensation   30    —    (5)
Tax credits   105    —    — 
Other   114    (49)   (82)
Total  $3,815   $3,197   $3,798 

 

The following is a summary of the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities:

 

   December 31, 
(Dollars in thousands)  2024   2023 
Assets:          
Allowance for credit losses  $2,813   $2,646 
Unfunded Commitments   103    129 
Excess tax basis of deductible intangible assets   26    38 
Net operating loss carry forward   997    933 
Unrealized losses on available-for-sale securities   4,191    4,406 
Unrealized losses on held-to-maturity securities   2,577    2,939 
Compensation expense deferred for tax purposes   1,528    1,448 
Deferred loss on other-than-temporary-impairment charges   5    5 
FASB 91 - Origination Income & Costs   439    473 
Other Real Estate Owned   228    229 
Other   118    145 
Total deferred tax asset   13,025    13,391 
Valuation reserve   (1,073)   (1,009)
Total deferred tax asset net of valuation reserve   11,952    12,382 
Liabilities:          
Tax depreciation in excess of book depreciation   668    445 
Excess financial reporting basis of assets acquired   863    919 
Total deferred tax liabilities   1,531    1,364 
Net deferred tax asset recognized  $10,421   $11,018 

 

The Company has approximately $25.2 million and $23.6 million in state net operating losses at December 31, 2024 and 2023, respectively. A valuation allowance is established to fully offset the deferred tax asset related to these net operating losses of the holding company. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Additional amounts of these deferred tax assets considered to be realizable could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced. The net deferred asset is included in other assets on the consolidated balance sheets.

 

A portion of the change in the net deferred tax asset relates to unrealized gains/losses on securities available-for-sale and held-to-maturity. The tax expense related to the change of $577 thousand has been recorded directly to accumulated other comprehensive income within shareholders’ equity. The balance in the change in net deferred tax asset results from the current period deferred tax expense of $20 thousand. At December 31, 2024 and 2023, the Company had no federal net operating loss carryforward.

Tax returns for 2021 and subsequent years are subject to examination by taxing authorities.

As of December 31, 2024, the Company had no material unrecognized tax benefits or accrued interest and penalties. It is the Company’s policy to account for interest and penalties accrued relative to unrecognized tax benefits as a component of income tax expense.