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Note 13 - Income Taxes
 12 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 13. Income Taxes

 

The components of income tax expense for the years ended December 31, 2023 and 2022 are as follows (in thousands):

 

   

2023

    

2022

  

Federal:

                

Current

   $ 746     $ 3,453  

Deferred

     565       529  

Total federal income tax expense

     1,311       3,982  

State:

                

Current

     560       1,781  

Deferred

     201       105  

Total state income tax expense

     761       1,886  
                 

Total income tax expense

   $ 2,072     $ 5,868  

 

Total income tax expense differed from the amounts computed by applying the U.S. federal income tax rate of 21% to income before income taxes for the years ended December 31, 2023 and 2022 as shown in the following table (in thousands):

 

   

2023

    

2022

  
                 

Income taxes at 21%

   $ 2,707     $ 5,284  

Increase (decrease) resulting from:

                

Tax-exempt interest

     (414 )     (541 )

State taxes, net of federal tax benefit

     334       1,684  

New Markets Tax Credits

     (725 )     (713 )

Valuation allowance

     112       69  

Other

     58       85  

Total income tax expense

   $ 2,072     $ 5,868  

 

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2023 and 2022 are as follows (in thousands):

 

   

2023

    

2022

  
                 

Deferred tax assets:

                

Allowance for loan losses

   $ 3,987     $ 3,731  

Net unrealized losses on securities available-for-sale

     14,831       19,887  

State operating and alternative minimum tax carryforward

     882       779  

Fair value adjustments from acquisitions

     41       61  

Accrued vacation

     275       267  

Off balance sheet reserve

     231       162  

Other deferred tax assets

     267       242  

Total deferred tax assets

     20,514       25,129  

Deferred tax liabilities:

                

Goodwill and other intangible assets

     (1,267 )     (1,168 )

Bank premises and equipment

     (1,300 )     (600 )

Deferred loan costs

     (201 )     (177 )

Other deferred tax liabilities

     (446 )     (363 )

Total deferred tax liabilities

     (3,214 )     (2,308 )
                 

Valuation allowance

     (804 )     (691 )
                 

Net deferred tax asset

   $ 16,496     $ 22,130  

 

The Company has approximately $578 thousand and $465 thousand of state income taxes associated with state net operating loss (“NOL”) carryforwards as of December 31, 2023 and 2022, respectively. The Company has recorded a valuation allowance against the tax effect of the NOL, as management believes it is more likely than not that such carryforwards will not be utilized.

 

The Company has approximately $226 thousand of state alternative minimum tax (“AMT”) credit carryforwards available to offset future state alternative minimum taxable income as of December 31, 2023 and 2022. The Company has recorded a valuation allowance against the tax effect of the AMT credit carryforwards, as management believes it is more likely than not that such carryforwards will not be utilized.

 

The Company and its subsidiaries file one income tax return in the U.S. federal jurisdiction and separate tax returns for the state of Iowa. The Company is no longer subject to U.S. federal income and state tax examinations for years before 2020.

 

The Company follows the accounting requirements for uncertain tax positions. Management has determined that the Company has no material uncertain tax positions and no material accrued interest or penalties as of or for the years ended December 31, 2023 and 2022 that would require recognition. The Company had no significant unrecognized tax benefits as of December 31, 2023, that if recognized, would affect the effective tax rate. The Company had no positions for which it deemed that it is reasonably possible that the total amounts of the unrecognized tax benefit will significantly increase or decrease within the next 12 months as of December 31, 2023 and 2022.