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Note 13 - Income Taxes
 12 Months Ended
Dec. 31, 2024
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, 2024 and 2023 are as follows (in thousands):

 

  

2024

  

2023

 

Federal:

        

Current

 $1,366  $746 

Deferred

  (83)  565 

Total federal income tax expense

  1,283   1,311 

State:

        

Current

  668   560 

Deferred

  72   201 

Total state income tax expense

  740   761 
         

Total income tax expense

 $2,023  $2,072 

 

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, 2024 and 2023 as shown in the following table (in thousands):

 

  

2024

  

2023

 
         

Income taxes at 21%

 $2,571  $2,707 

Increase (decrease) resulting from:

        

Tax-exempt interest

  (361)  (414)

State taxes, net of federal tax benefit

  392   334 

New Markets Tax Credits

  (725)  (725)

Valuation allowance

  112   112 

Other

  34   58 

Total income tax expense

 $2,023  $2,072 

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2024 and 2023 are as follows (in thousands):

 

  

2024

  

2023

 
         

Deferred tax assets:

        

Allowance for loan losses

 $4,054  $3,987 

Net unrealized losses on securities available-for-sale

  12,380   14,831 

State operating and alternative minimum tax carryforward

  985   882 

Accrued vacation

  277   275 

Off balance sheet reserve

  197   231 

Other deferred tax assets

  383   308 

Total deferred tax assets

  18,276   20,514 

Deferred tax liabilities:

        

Goodwill and other intangible assets

  (1,391)  (1,267)

Bank premises and equipment

  (1,181)  (1,300)

Deferred loan costs

  (204)  (201)

Other deferred tax liabilities

  (528)  (446)

Total deferred tax liabilities

  (3,304)  (3,214)
         

Valuation allowance

  (916)  (804)
         

Net deferred tax asset

 $14,056  $16,496 

 

The Company has approximately $690 thousand and $578 thousand of state income taxes associated with state net operating loss (“NOL”) carryforwards as of December 31, 2024 and 2023, 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, 2024 and 2023. 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 2021.

 

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, 2024 and 2023 that would require recognition. The Company had no significant unrecognized tax benefits as of December 31, 2024, 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, 2024 and 2023.