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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | Note 7 – Income Taxes At year-end, components of income tax expense/(benefit) consist of the following:
|  | (Dollars in thousands) |
|  | 2016 |  |  | 2015 |
Federal: |  |  |  |  |  |  |  |
Current |  | $ | 2,343 |  |  | $ | 2,387 |
Deferred |  |  | (129 | ) |  |  | (527 | )
State: |  |  |  |  |  |  |  |
Current |  |  | 80 |  |  |  | 79 |
Deferred, net of valuation allowance |  |  | 254 |  |  |  | 82 |
Removal of valuation allowance on state NOL, net |  |  | - |  |  |  | (223 | )
Income tax expense |  | $ | 2,548 |  |  | $ | 1,798 |
Effective tax rates differ from the federal statutory rate of 34% applied to income before income taxes due to the following:
|  | (Dollars in thousands) |
|  | 2016 |  |  | 2015 |
Federal statutory rate |  |  | 34 | % |  |  | 34 | %
Tax expense at statutory rate |  | $ | 3,975 |  |  | $ | 3,281 |
State tax, net of federal effect |  |  | 220 |  |  |  | 106 |
Tax exempt income |  |  | (1,318 | ) |  |  | (1,271 | )
Bank owned life insurance |  |  | (160 | ) |  |  | (150 | )
Captive insurance |  |  | (179 | ) |  |  |  |
Removal of valuation allowance on state NOL, net |  |  | - |  |  |  | (223 | )
Other |  |  | 10 |  |  |  | 55 |
Total income tax expense |  | $ | 2,548 |  |  | $ | 1,798 |
At December 31, the components of the net deferred tax asset recorded in the consolidated balance sheets are as follows:
|  | (Dollars in thousands) |
|  | 2016 |  |  | 2015 |
Deferred tax assets: |  |  |  |  |  |  |  |
Bad debts |  | $ | 2,872 |  |  | $ | 2,591 |
Deferred loan fees |  |  | 60 |  |  |  | 65 |
Deferred compensation |  |  | 503 |  |  |  | 498 |
Unrealized depreciation on securities available-for-sale, net |  |  | 771 |  |  |  | - |
Net operating loss, state |  |  | 294 |  |  |  | 449 |
Tax credits |  |  | 98 |  |  |  | 91 |
Nonaccrual loan interest income |  |  | 109 |  |  |  | 53 |
Share based compensation |  |  | 126 |  |  |  | 39 |
REO writedowns |  |  | - |  |  |  | 12 |
Unqualified deferred compensation plan |  |  | 74 |  |  |  | 70 |
Post retirement benefit |  |  | - |  |  |  | 47 |
Other-than-temporary impairment |  |  | 92 |  |  |  | 92 |
Accrued vacation |  |  | 129 |  |  |  | 116 |
Impairment on land |  |  | 71 |  |  |  | 71 |
Purchase accounting |  |  | - |  |  |  | 21 |
Other |  |  | 29 |  |  |  | 28 |
Total deferred tax assets |  |  | 5,228 |  |  |  | 4,243 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  |  | (850 | ) |  |  | (901 | )
Prepaids |  |  | (346 | ) |  |  | (133 | )
Mortgage servicing rights |  |  | (51 | ) |  |  | (60 | )
Deferred stock dividends |  |  | (97 | ) |  |  | (97 | )
Unrealized appreciation on securities available-for-sale, net |  |  | - |  |  |  | (722 | )
Post retirement unrealized gain |  |  | - |  |  |  | (20 | )
Purchase accounting |  |  | (88 | ) |  |  | - |
Other |  |  | (181 | ) |  |  | (90 | )
Total deferred tax liabilities |  |  | (1,613 | ) |  |  | (2,023 | )
Valuation allowance |  |  | (98 | ) |  |  | (91 | )
Net deferred tax asset |  | $ | 3,517 |  |  | $ | 2,129 |
At December 31, 2016, the Bancorp has a state net operating loss carry forward of approximately $6.9 million which will begin to expire in 2024 if not used. The Bancorp also has a state tax credit carry forward of approximately $148 thousand which will begin to expire in 2017 if not used. Management concluded in 2015 that the state net operating loss will be fully utilized and reversed the portion of the valuation allowance that was in place on the state net operating loss. A valuation allowance remains in place on the state tax credit carryforward. A valuation allowance of $98 thousand and $91 thousand was provided at December 31, 2016 and December 31, 2015, respectively, for the state tax credits. The Bancorp qualified under provisions of the Internal Revenue Code, to deduct from taxable income a provision for bad debts in excess of the provision for such losses charged to income in the financial statements, if any. Accordingly, retained earnings at December 31, 2016 and 2015 includes, approximately $6.0 million for which no provision for federal income taxes has been made. If, in the future this portion of retained earnings is used for any purpose other than to absorb bad debt losses, federal income taxes would be imposed at the then applicable rate. The unrecorded deferred income tax liability on the above amounts was approximately $2.0 million at December 31, 2016 and 2015. The Bancorp had no unrecognized tax benefits at any time during 2016 or 2015 and does not anticipate any significant increase or decrease in unrecognized tax benefits during 2017. Should the accrual of any interest or penalties relative to unrecognized tax benefits be necessary, it is the Bancorp's policy to record such accruals through income tax accounts; no such accruals existed at any time during 2016 or 2015. The Bancorp and its subsidiaries are subject to US Federal income tax as well as income tax of the states of Indiana and Illinois.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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