v3.22.4
Note 13 - Income Taxes
 12 Months Ended
Dec. 31, 2022
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

13.

INCOME TAXES

 

The provision for federal income taxes for the years ended December 31 consists of:

 

(Dollar amounts in thousands)

 

2022

  

2021

 
         

Current payable

 $3,544  $4,466 

Deferred

  (324)  (401)
         

Total provision

 $3,220  $4,065 

 

The tax effects of deductible and taxable temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows at December 31:

 

(Dollar amounts in thousands)

 

2022

  

2021

 
         

Deferred tax assets:

        

Allowance for loan and lease losses

 $2,921  $3,012 

Supplemental retirement plan

  932   608 

Investment security basis adjustment

  18   18 

Nonaccrual interest income

  319   350 

Accrued compensation

  328   293 

Deferred origination fees, net

  26   - 

Net unrealized loss on AFS securities

  5,886   - 

Lease liability

  952   1,161 

Acquisition fair value adjustments

  728   - 

Net operating losses

  366   - 

Other

  252   - 

Gross deferred tax assets

  12,728   5,442 
         

Deferred tax liabilities:

        

Premises and equipment

  1,123   632 

Net unrealized gain on AFS securities

  -   920 

Net unrealized gain on equity securities

  48   85 

FHLB stock dividends

  242   139 

Intangibles

  474   450 

Mortgage servicing rights

  435   114 

Deferred origination fees, net

  -   34 

Acquisition fair value adjustments

  -   249 

Right of use assets

  928   1,126 

Other

  24   - 

Gross deferred tax liabilities

  3,274   3,749 
         

Net deferred tax assets

 $9,454  $1,693 

 

No valuation allowance was established on December 31, 2022, and 2021, in view of the Company’s tax strategies, coupled with the anticipated future taxable income as evidenced by the Company’s earnings potential.

 

The reconciliation between the federal statutory rate and the Company’s effective consolidated income tax rate for the years ended December 31, is as follows:

 

(Dollar amounts in thousands)

 

2022

  

2021

 
      

% of

      

% of

 
      

Pretax

      

Pretax

 
  

Amount

  

Income

  

Amount

  

Income

 
                 

 

                

Provision at statutory rate

 $3,967   21.0% $4,766   21.0%

Tax-exempt income

  (893)  (4.7)%  (703)  (3.1)%

Nondeductible interest expense

  5   -%  -   -%

Nondeductible acquisition expense

  175   0.9%  -   -%

Other

  (34)  (0.2)%  2   -%

 

                

Actual tax expense and effective rate

 $3,220   17.0% $4,065   17.9%

 

ASC 740-10 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.

 

At December 31, 2022 and 2021, the Company had no ASC 740-10 unrecognized tax benefits. The Company does not expect the total amount of unrecognized tax benefits to significantly increase within the next 12 months. The Company recognizes interest and penalties on unrecognized tax benefits as a component of income tax expense.

 

The Company and the Bank are subject to U.S. federal income tax as well as an income tax in the states of Ohio and Florida, and the Bank is subject to a capital-based franchise tax in the state of Ohio. The Company and the Bank are no longer subject to examination by taxing authorities for years before 2019.