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Note K - Income Taxes | 12 Months Ended
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Dec. 31, 2019
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note K - Income Taxes On December 22, 2017, the TCJA was signed into law, which included several provisions that affected the Company’s federal income tax expense, which reduced the federal income tax rate to 21% effective January 1, 2018. As a result of the rate reduction, the Company was required to re-measure, through income tax expense in the period of enactment, the deferred tax assets and liabilities using the enacted rate at which these items are expected to be recovered or settled. The re-measurement of the Company’s net deferred tax asset resulted in additional 2017 income tax expense of $1,783. The provision for income taxes consists of the following components:
|  | 2019 |  |  | 2018 |  |  | 2017 |
Current tax expense |  | $ | 1,446 |  |  | $ | 2,389 |  |  | $ | 2,579 |
Deferred tax (benefit) expense |  |  | 367 |  |  |  | (134 | ) |  |  | 1,907 |
Total income taxes |  | $ | 1,813 |  |  | $ | 2,255 |  |  | $ | 4,486 |
The source of deferred tax assets and deferred tax liabilities at December 31:
|  | 2019 |  |  | 2018 |
Items giving rise to deferred tax assets: |  |  |  |  |  |  |  |
Allowance for loan losses |  | $ | 1,364 |  |  | $ | 1,463 |
Unrealized loss on securities available for sale |  |  | ---- |  |  |  | 568 |
Deferred compensation |  |  | 1,700 |  |  |  | 1,580 |
Deferred loan fees/costs |  |  | 110 |  |  |  | 119 |
Other real estate owned |  |  | 4 |  |  |  | 434 |
Accrued bonus |  |  | 204 |  |  |  | 280 |
Purchase accounting adjustments |  |  | 24 |  |  |  | 61 |
Net operating loss |  |  | 115 |  |  |  | 132 |
Lease liability |  |  | 274 |  |  |  | ---- |
Other |  |  | 346 |  |  |  | 257 |
Items giving rise to deferred tax liabilities: |  |  |  |  |  |  |  |
Mortgage servicing rights |  |  | (77 | ) |  |  | (80 | )
FHLB stock dividends |  |  | (676 | ) |  |  | (676 | )
Unrealized gain on securities available for sale |  |  | (140 | ) |  |  | ---- |
Prepaid expenses |  |  | (182 | ) |  |  | (191 | )
Depreciation and amortization |  |  | (579 | ) |  |  | (656 | )
Right-of-use asset |  |  | (274 | ) |  |  | ---- |
Other |  |  | ---- |  |  |  | (3 | )
Net deferred tax asset |  | $ | 2,213 |  |  | $ | 3,288 |
The Company determined that it was not required to establish a valuation allowance for deferred tax assets since management believes that the deferred tax assets are likely to be realized through the future reversals of existing taxable temporary differences, deductions against forecasted income and tax planning strategies. At December 31, 2019, the Company’s deferred tax asset related to Section 382 net operating loss carryforwards was $550, which will expire in 2026. The difference between the financial statement tax provision and amounts computed by applying the statutory federal income tax rate of 21% in 2019 and 2018 and 34% in 2017 to income before taxes is as follows:
|  | 2019 |  |  | 2018 |  |  | 2017 |
Statutory tax |  | $ | 2,461 |  |  | $ | 2,982 |  |  | $ | 4,078 |
Effect of nontaxable interest |  |  | (336 | ) |  |  | (352 | ) |  |  | (514 | )
Effect of nontaxable insurance premiums |  |  | (212 | ) |  |  | (218 | ) |  |  | (303 | )
Income from bank owned insurance, net |  |  | (141 | ) |  |  | (142 | ) |  |  | (230 | )
Effect of postretirement benefits |  |  | 54 |  |  |  | 20 |  |  |  | (78 | )
Effect of nontaxable life insurance death proceeds |  |  | ---- |  |  |  | ---- |  |  |  | (175 | )
Impact from TCJA |  |  | ---- |  |  |  | ---- |  |  |  | 1,783 |
Effect of state income tax |  |  | 100 |  |  |  | 33 |  |  |  | 70 |
Tax credits |  |  | (145 | ) |  |  | (217 | ) |  |  | (191 | )
Milton Merger Costs |  |  | ---- |  |  |  | ---- |  |  |  | 4 |
Other items |  |  | 32 |  |  |  | 149 |  |  |  | 42 |
Total income taxes |  | $ | 1,813 |  |  | $ | 2,255 |  |  | $ | 4,486 |
At December 31, 2019 and December 31, 2018, the Company had no unrecognized tax benefits. The Company does not expect the amount of unrecognized tax benefits to significantly change within the next twelve months. The Company did not recognize any interest and/or penalties related to income tax matters for the periods presented. The Company is subject to U.S. federal income tax as well as West Virginia state income tax. The Company is no longer subject to federal or state examination for years prior to 2016. The tax years 2016 - 2018 remain open to federal and state examinations.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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