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Note 12 - Income Taxes | 12 Months Ended
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Dec. 31, 2024
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
(12) | INCOME TAXES
The Company and its corporate subsidiaries file consolidated tax returns. The components of consolidated income tax expense for the years ended December 31, 2024, 2023 and 2022 were as follows:
(In thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Current |  | $ | 2,767 |  |  | $ | 2,946 |  |  | $ | 2,438 |
Deferred |  |  | (551 | ) |  |  | (698 | ) |  |  | (118 | )
Totals |  | $ | 2,216 |  |  | $ | 2,248 |  |  | $ | 2,320 |
The reconciliation of income tax expense with the amount which would have been provided at the federal statutory rate of 21% for the years ended December 31, 2024, 2023, and 2022 follows:
(In thousands) |  | 2024 |  |  | 2023 |  |  | 2022 |
Provision at federal statutory tax rate |  | $ | 2,975 |  |  | $ | 3,161 |  |  | $ | 2,989 |
State income tax-net of federal tax benefit |  |  | 120 |  |  |  | 178 |  |  |  | 301 |
Tax-exempt interest income |  |  | (608 | ) |  |  | (733 | ) |  |  | (709 | )
Bank-owned life insurance income |  |  | (47 | ) |  |  | (43 | ) |  |  | (42 | )
Captive insurance net premiums |  |  | - |  |  |  | (126 | ) |  |  | (169 | )
Investment in tax credit entities |  |  | (288 | ) |  |  | (228 | ) |  |  | (63 | )
Other |  |  | 64 |  |  |  | 39 |  |  |  | 13 |
Totals |  | $ | 2,216 |  |  | $ | 2,248 |  |  | $ | 2,320 |
Effective tax rate |  |  | 15.6 | % |  |  | 14.9 | % |  |  | 16.3 | %
Significant components of the deferred tax assets and liabilities as of December 31, 2024 and 2023 were as follows:
(In thousands) |  | 2024 |  |  | 2023 |
Deferred tax assets (liabilities): |  |  |  |  |  |  |  |
Deferred compensation plans |  | $ | 51 |  |  | $ | 61 |
Unrealized loss on securities available for sale |  |  | 6,701 |  |  |  | 7,247 |
ACL - loans |  |  | 2,297 |  |  |  | 1,845 |
ACL - unfunded commitments |  |  | 32 |  |  |  | 31 |
Accrued Expenses |  |  | 58 |  |  |  | - |
Unrealized loss on equity securities |  |  | 252 |  |  |  | 160 |
Restricted stock |  |  | 18 |  |  |  | 26 |
Interest on nonaccrual loans |  |  | 143 |  |  |  | 128 |
Deferred income |  |  | 102 |  |  |  | 160 |
State tax credit carryforwards |  |  | 305 |  |  |  | 381 |
Other |  |  | 6 |  |  |  | 7 |
Deferred tax assets |  |  | 9,965 |  |  |  | 10,046 |
Depreciation |  |  | (890 | ) |  |  | (921 | )
Deferred loan fees and costs |  |  | (285 | ) |  |  | (236 | )
FHLB stock dividends |  |  | (37 | ) |  |  | (37 | )
Prepaid expenses |  |  | (219 | ) |  |  | (246 | )
Acquisition purchase accounting adjustments |  |  | (228 | ) |  |  | (270 | )
Other |  |  | (23 | ) |  |  | (58 | )
Deferred tax liabilities |  |  | (1,682 | ) |  |  | (1,768 | )
Net deferred tax asset |  | $ | 8,283 |  |  | $ | 8,278 |
At December 31, 2024 and 2023, the Company had state tax credit carryforwards of $305,000 and $381,000, respectively, that may be carried forward nine years and expire in 2032 if unused. At December 31, 2024 and 2023, the Company had no liability for unrecognized income tax benefits related to uncertain tax positions and does not anticipate any increase in the liability for unrecognized tax benefits during the next twelve months. The Company believes that its income tax positions would be sustained upon examination and does not anticipate any adjustments that would result in a material change to its financial position or results of operations. The Company files consolidated U.S. federal income tax returns and Indiana and Kentucky state income tax returns. Returns filed in these jurisdictions for tax years ended on or after December 31, 2021 are subject to examination by the relevant taxing authorities. Each entity included in the consolidated federal, Indiana and Kentucky state income tax returns filed by the Company are charged or given credit for the applicable tax as though separate returns were filed. Retained earnings of the Bank at December 31, 2024 and 2023 include approximately $909,000 for which no deferred federal income tax liability has been recognized. This amount represents an allocation of income to bad debt deductions as of December 31, 1987 for tax purposes only. Reduction of such allocated amounts for purposes other than tax bad debt losses, including redemption of bank stock, excess dividends or loss of “bank” status, would create income for tax purposes only, subject to the then-current corporate income tax rate. The unrecorded deferred liability on these amounts was approximately $191,000 at December 31, 2024 and 2023.

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