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Income Tax Expense (Benefit) | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Tax Expense (Benefit) | Income Tax Expense (Benefit) The composition of income tax expense (benefit) for the years ended December 31, 2024, 2023, and 2022 was as follows:
(dollars in thousands) | 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
Federal | $ | 3,070 |  |  | $ | 793 |  |  | $ | 4,591 |
State | — |  |  | 67 |  |  | (134) |
Total current | 3,070 |  |  | 860 |  |  | 4,457 |
Deferred: |  |  |  |  |
Federal | 1,032 |  |  | (1,384) |  |  | (119) |
State | — |  |  | — |  |  | — |
Total deferred | 1,032 |  |  | (1,384) |  |  | (119) |
Total income tax expense (benefit) | $ | 4,102 |  |  | $ | (524) |  |  | $ | 4,338 |
Applicable income tax expense (benefit) for financial reporting purposes differs from the amount computed by applying the statutory federal income tax rate for the reasons noted in the table for the years ended December 31, 2024, 2023, and 2022 are as follows:
| 2024 |  | 2023 |  | 2022
(dollars in thousands) | Amount |  | % |  | Amount |  | % |  | Amount |  | %
Income before provision for income tax (benefit) | $ | 22,358 |  |  |  |  | $ | 432 |  |  |  |  | $ | 25,089 |  |  |
Tax at statutory federal income tax rate | $ | 4,695 |  |  | 21.00 | % |  | $ | 91 |  |  | 21.00 | % |  | $ | 5,269 |  |  | 21.00 | %
Tax-exempt income, net | (567) |  |  | (2.54) |  |  | (509) |  |  | (117.88) |  |  | (821) |  |  | (3.27) |
State income tax expense (benefit), net of federal tax expense (benefit) | — |  |  | — |  |  | 53 |  |  | 12.25 |  |  | (106) |  |  | (0.42) |
Other, net | (26) |  |  | (0.11) |  |  | (159) |  |  | (36.86) |  |  | (4) |  |  | (0.02) |
Provision for income tax (benefit) expense | $ | 4,102 |  |  | 18.35 | % |  | $ | (524) |  |  | (121.49) | % |  | $ | 4,338 |  |  | 17.29 | %
Income taxes (benefit) as a percentage of earnings before income taxes (benefit) as reported in the consolidated financial statements were 18.3% for the year ended December 31, 2024 compared to (121.5)% and 17.3% for the years ended December 31, 2023 and 2022, respectively. The effective tax rate for each of years ended December 31, 2024, 2023, and 2022, respectively, is lower than the U.S. federal statutory rate of 21% primarily due to tax-free revenues. The components of deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023 were as follows:
(dollars in thousands) | 2024 |  | 2023
Deferred tax assets: |  |  |
Allowance for credit losses | $ | 4,589 |  |  | $ | 4,669 |
Securities | 6,428 |  |  | 5,653 |
Other real estate owned | 421 |  |  | 1,250 |
Deferred loan fees | 450 |  |  | 437 |
Lease liability | 352 |  |  | 255 |
Accrued / deferred compensation | 763 |  |  | 835 |
Other | 497 |  |  | 592 |
Total deferred tax assets | $ | 13,500 |  |  | $ | 13,691 |
Deferred tax liabilities: |  |  |
Premises and equipment | $ | 515 |  |  | $ | 319 |
Mortgage servicing rights | — |  |  | 365 |
Deferred loan costs | 395 |  |  | 444 |
Pension | 2,424 |  |  | 1,180 |
Right-of-use asset | 343 |  |  | 246 |
Prepaid expenses | 233 |  |  | 187 |
Other | 61 |  |  | 38 |
Total deferred tax liabilities | 3,971 |  |  | 2,779 |
Net deferred tax assets | $ | 9,529 |  |  | $ | 10,912 |
The deferred tax asset associated with the unrealized losses on securities is mainly a result of changes in interest rates, and the unrealized losses are considered to be temporary as the fair value is expected to recover as the securities approach their respective maturity dates. The issuers of the securities are of high credit quality and all principal amounts are expected to be paid when the securities mature. The Company does not intend to sell and it is more likely than not that the Company will not be required to sell the securities prior to their anticipated recovery. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of the appropriate character during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning initiatives in making this assessment. In management's opinion, the Company will more likely than not realize the benefits of its deferred tax assets and, therefore, has not established a valuation allowance against its deferred tax assets as of December 31, 2024. Management arrived at this conclusion based upon the level of historical taxable income and projections for future taxable income of the appropriate character over the periods in which the deferred tax assets are deductible. The Company follows ASC Topic 740, Income Taxes, which addresses the accounting for uncertain tax positions. For each of the years ended December 31, 2024 and 2023, respectively, the Company did not have any uncertain tax provisions, and did not record any related tax liabilities.

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