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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | (17) Income Taxes Income tax expense (benefit) attributable to income from operations consisted of the following: Schedule of Components of Income Tax Expense (Benefit)
|  | 2024 |  |  | 2023 |  |  | 2022 |
(Dollars in thousands) |  | Years ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,012 |  |  | $ | 1,711 |  |  | $ | 559 |
State |  |  | (714 | ) |  |  | (161 | ) |  |  | (317 | )
Total current |  |  | 1,298 |  |  |  | 1,550 |  |  |  | 242 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (120 | ) |  |  | 295 |  |  |  | 994 |
State |  |  | (71 | ) |  |  | 56 |  |  |  | 238 |
Total deferred |  |  | (191 | ) |  |  | 351 |  |  |  | 1,232 |
Deferred tax valuation allowance |  |  | (21 | ) |  |  | 53 |  |  |  | (42 | )
Income tax expense |  | $ | 1,086 |  |  | $ | 1,954 |  |  | $ | 1,432 |
The reasons for the difference between actual income tax expense (benefit) and expected income tax expense attributable to income from operations at the statutory federal income tax rate were as follows: Schedule of Effective Income Tax Rate Reconciliation
|  | 2024 |  |  | 2023 |  |  | 2022 |
(Dollars in thousands) |  | Years ended December 31, |
|  | 2024 |  |  | 2023 |  |  | 2022 |
Computed “expected” tax expense |  | $ | 2,958 |  |  | $ | 2,980 |  |  | $ | 2,375 |
(Reduction) increase in income taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt interest income, net |  |  | (556 | ) |  |  | (592 | ) |  |  | (633 | )
Excess tax expense (benefit) from stock option exercise |  |  | 2 |  |  |  | 2 |  |  |  | (4 | )
Bank owned life insurance |  |  | (378 | ) |  |  | (208 | ) |  |  | (180 | )
Reversal of unrecognized tax benefits, net |  |  | (1,037 | ) |  |  | (517 | ) |  |  | (465 | )
State income taxes, net of federal benefit |  |  | 401 |  |  |  | 476 |  |  |  | 369 |
Investment tax credits |  |  | (116 | ) |  |  | (47 | ) |  |  | (23 | )
Other, net |  |  | (188 | ) |  |  | (140 | ) |  |  | (7 | )
Income tax (benefit) expense |  | $ | 1,086 |  |  | $ | 1,954 |  |  | $ | 1,432 |
The tax effects of temporary differences that give rise to the significant portions of the deferred tax assets and liabilities at the following dates were as follows: Schedule of Deferred Tax Assets and Liabilities
|  | 2024 |  |  | 2023 |
(Dollars in thousands) |  | As of December 31, |
|  | 2024 |  |  | 2023 |
Deferred tax assets: |  |  |  |  |  |  |  |
Unrealized loss on investment securities available-for-sale |  | $ | 5,056 |  |  | $ | 5,371 |
Loans, including allowance for credit losses |  |  | 3,280 |  |  |  | 2,949 |
State taxes |  |  | 494 |  |  |  | 536 |
Other, net |  |  | 297 |  |  |  | 244 |
Net operating loss carry forwards |  |  | 213 |  |  |  | 332 |
Net deferred loan fees |  |  | 140 |  |  |  | 144 |
Acquisition costs |  |  | 79 |  |  |  | 99 |
Valuation allowance on other real estate |  |  | - |  |  |  | 75 |
Deferred compensation arrangements |  |  | 63 |  |  |  | 62 |
Total deferred tax assets |  |  | 9,622 |  |  |  | 9,812 |
Less valuation allowance |  |  | (213 | ) |  |  | (234 | )
Total deferred tax assets, net of valuation allowance |  |  | 9,409 |  |  |  | 9,578 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangible assets |  |  | 1,252 |  |  |  | 1,277 |
Prepaid expenses |  |  | 669 |  |  |  | 586 |
Mortgage servicing rights |  |  | 643 |  |  |  | 681 |
Premises and equipment, net of depreciation |  |  | 601 |  |  |  | 618 |
Investments |  |  | 99 |  |  |  | 158 |
FHLB stock dividends |  |  | 49 |  |  |  | 59 |
Total deferred tax liabilities |  |  | 3,313 |  |  |  | 3,379 |
Net deferred tax asset |  | $ | 6,096 |  |  | $ | 6,199 |
The Company had Kansas corporate and privilege tax net operating loss carry forwards totaling $4.5 million and $4.6 million as of December 31, 2024 and 2023, respectively, which expire between 2025 and 2032. The Company had recorded a valuation allowance against the Kansas net operating loss carry forwards. The Company had federal net operating loss carry forwards totaling $465,000 as of December 31, 2023, which was utilized during 2024. A valuation allowance related to the remaining deferred tax assets has not been provided because management believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets at December 31, 2024. Retained earnings at December 31, 2024 and 2023 include approximately $6.3 million for which no provision for federal income tax had been made. This amount represents allocations of income to bad debt deductions in years prior to 1988 for tax purposes only. Reduction of amounts allocated for purposes other than tax bad debt losses will create income for tax purposes only, which will be subject to the then current corporate income tax rate. The Company has unrecognized tax benefits representing tax positions for which a liability has been established. A reconciliation of the beginning and ending amount of the liability relating to unrecognized tax benefits is as follows: Schedule of Unrecognized Tax Benefits
|  | 2024 |  |  | 2023 |
(Dollars in thousands) |  | Years ended December 31, |
|  | 2024 |  |  | 2023 |
Unrecognized tax benefits at beginning of year |  | $ | 2,040 |  |  | $ | 2,157 |
Gross increases to current year tax positions |  |  | 495 |  |  |  | 472 |
Gross decreases to prior year’s tax positions |  |  | (73 | ) |  |  | (61 | )
Lapse of statute of limitations |  |  | (975 | ) |  |  | (528 | )
Unrecognized tax benefits at end of year |  | $ | 1,487 |  |  | $ | 2,040 |
Tax years that remain open and subject to audit include the years 2020 through 2024 for both federal and state tax purposes. The Company recognized $975,000 and $528,000 of previously unrecognized tax benefits during 2024 and 2023, respectively. The gross unrecognized tax benefits of $1.5 million and $2.0 million at December 31, 2024 and December 31, 2023, respectively, would favorably impact the effective tax rate by $1.2 million and $1.6 million, respectively, if recognized. During 2024, 2023 and 2022, the Company recorded an income tax benefit of $209,000, $51,000 and $52,000, respectively, associated with interest and penalties. As of December 31, 2024 and 2023, the Company had accrued interest and penalties related to the unrecognized tax benefits of $311,000 and $520,000, respectively, which are not included in the table above. The Company believes that it is reasonably possible that a reduction in gross unrecognized tax benefits of up to $264,000 is possible during the next 12 months as a result of the lapse of the statute of limitations.

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