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Note 13 - Income Taxes | 12 Months Ended
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Dec. 31, 2018
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
13. | INCOME TAXES
The Tax Cuts and Jobs Act of 2017 (“Tax Reform”) was enacted in December 2017. This legislation made significant changes in federal tax law, including a reduction in the corporate income tax rates, changes to net operating loss carryforwards and carrybacks and a repeal of the corporate alternative minimum tax. The legislation reduced the U.S. corporate income tax rate to 21% beginning in 2018. The consolidated provisions for income taxes for the years ended December 31, 2018 and 2017 were as follows:
|  | 2018 |  |  | 2017 |
|  | (Dollars in Thousands) |
Federal |  |  |  |  |  |  |  |
Current |  | $ | (157 | ) |  | $ | 65 |
Deferred |  |  | 859 |  |  |  | 3,105 |
Total federal |  |  | 702 |  |  |  | 3,170 |
State |  |  |  |  |  |  |  |
Current |  |  | 59 |  |  |  | 143 |
Deferred |  |  | 140 |  |  |  | (278) |
Total state |  |  | 199 |  |  |  | (135) |
Total |  | $ | 901 |  |  | $ | 3,035 |
The consolidated tax expense (benefit) differed from the amount computed by applying the Company’s federal statutory income tax rate of 21.0% and 34.0% in 2018 and 2017, respectively, as described in the following table:
|  | 2018 |  |  | 2017 |
|  | (Dollars in Thousands) |
Income tax expense at federal statutory rate |  | $ | 712 |  |  | $ | 892 |
Increase (decrease) resulting from: |  |  |  |  |  |  |  |
Tax-exempt interest |  |  | (119 | ) |  |  | (219 | )
Bank-owned life insurance |  |  | (66 | ) |  |  | (109 | )
State income tax expense, net of federal income taxes |  |  | 137 |  |  |  | 54 |
Tax Reform adjustment |  |  | — |  |  |  | 2,471 |
Other |  |  | 237 |  |  |  | (54 | )
Total |  | $ | 901 |  |  | $ | 3,035 |
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2018 and 2017 are presented below:
|  | 2018 |  |  | 2017 |
|  | (Dollars in Thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Allowance for loan losses |  | $ | 1,228 |  |  | $ | 1,197 |
Deferred compensation |  |  | 1,064 |  |  |  | 1,045 |
Deferred commissions and fees |  |  | 308 |  |  |  | 313 |
Impairment of other real estate owned |  |  | 99 |  |  |  | 532 |
Federal net operating loss carryforwards |  |  | 1,549 |  |  |  | 1,486 |
State net operating loss carryforwards |  |  | 280 |  |  |  | 288 |
Federal alternative minimum tax and general business credits carryforwards |  |  | 167 |  |  |  | 340 |
Unrealized loss on securities available-for-sale |  |  | 797 |  |  |  | 400 |
Other |  |  | 621 |  |  |  | 418 |
Total gross deferred tax assets |  |  | 6,113 |  |  |  | 6,019 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Premises and equipment |  |  | 888 |  |  |  | 214 |
Core deposit intangible |  |  | 463 |  |  |  | — |
Limited partnerships |  |  | 122 |  |  |  | 81 |
Cash flow hedges |  |  | — |  |  |  | 111 |
Other |  |  | 31 |  |  |  | 24 |
Total gross deferred tax liabilities |  |  | 1,504 |  |  |  | 430 |
Net deferred tax asset, included in other assets |  | $ | 4,609 |  |  | $ | 5,589 |
As of December 31, 2018 and 2017, respectively, the Company had $2.0 million and $2.1 million related to federal and state net operating loss and tax credit carryforwards that can be used to offset income in future periods and reduce income taxes payable in those future periods. The majority of these carry-forwards will not begin to expire until 2032. The remaining net deferred tax assets, which totaled $2.6 million and $3.5 million as of December 31, 2018 and 2017, respectively, do not have an expiration date. The Company’s determination of the realization of net deferred tax assets at December 31, 2018 and 2017 was based on management’s assessment of all available positive and negative evidence. As of both December 31, 2018 and December 31, 2017, the Company was not in a three -year cumulative loss position. In addition, the Company has positive evidence supporting the realization of its net deferred tax assets as of December 31, 2018, including the reversal of taxable temporary differences, a strong history of earnings and tax planning strategies, including the conversion of tax-exempt investments to taxable investments to generate future taxable income to prevent tax attributes, such as net operating losses, from expiring unutilized. Accordingly, a valuation allowance was not established as of December 31, 2018 or December 31, 2017. The Company files a consolidated income tax return with the federal government and the States of Alabama and Tennessee. ALC files several state income tax returns, with the majority of its non-Alabama income being apportioned to Mississippi . The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and the states in which it filed for the years ended December 31, 2013 through 2018. As of December 31, 2018, the Company had no unrecognized tax benefits related to federal or state income tax matters and does not anticipate any material increase or decrease in unrecognized tax benefits relative to any tax positions taken prior to December 31, 2018. As of December 31, 2018, the Company had accrued no interest and no penalties related to uncertain tax positions.

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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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