v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The components of income tax expense (benefit) are as follows:
For the Years Ended December 31,
(In thousands)202520242023
Current:
Federal$140 $5,162 $5,964 
State240 612 1,087 
Foreign71 160 (193)
Deferred:
Federal6,244 (891)(242)
State952 (156)(42)
Total income tax expense$7,647 $4,887 $6,574 
Income tax expense (benefit) broken out between Federal, state and foreign is as follows:
For the Years Ended December 31,
(In thousands)202520242023
Federal$6,384 $4,271 $5,722 
State1,192 456 1,045 
Foreign71 160 (193)
Total income tax expense$7,647 $4,887 $6,574 
The Company adopted ASU 2023-09 on a prospective basis on January 1, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the expected income tax expense (benefit) and effective tax rate, computed by applying the effective statutory rate of 21% for the year ended December 31, 2025 as follows:
For the Year Ended December 31, 2025
(In thousands)AmountPercent
U.S federal statutory tax rate$8,112 21.0 %
State and local income taxes, net of federal income tax effect (1)
942 2.4 %
Foreign tax effects71 0.2 %
Tax credits(431)(1.1)%
Nontaxable or nondeductible items:
Tax-exempt income(1,246)(3.3)%
Share-based compensation adjustment160 0.4 %
Other, net39 0.1 %
Total income tax expense$7,647 19.7 %
(1)State taxes in Missouri and California made up the majority (greater than 50%) of the tax effect in this category.

The following table presents the required disclosures prior to the Company's adoption of ASU 2023-09 and reconciles the expected income tax expense (benefit), computed by applying the effective federal statutory rate of 21% for each year to income before income tax expense is as follows:

For the Years Ended
(In thousands)20242023
Expected income tax expense$4,898 $7,278 
(Reductions) increases resulting from:
Tax-exempt income(1,045)(1,104)
State taxes, net of federal benefit355 801 
Share-based compensation adjustment316 298 
Early surrender of bank-owned life insurance279 — 
Federal tax credits(397)(643)
Other, net481 (56)
Total income tax expense$4,887 $6,574 

Income tax expense in 2025 totaled $7.6 million compared to $4.9 million in 2024 and $6.6 million in 2023. When measured as a percent of pre-tax income, the Company’s effective tax rate was 19.7% in 2025, 20.8% in 2024, and 19.1% in 2023.
The tax effects of temporary differences which give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:
December 31,
(In thousands)20252024
Deferred tax assets:
Allowance for credit losses$3,236 $3,188 
Supplemental executive retirement plan accrual2,286 2,345 
Stock compensation2,819 2,623 
Unrealized loss on investment securities available-for-sale (1)
8,266 14,205 
Research and development expenses— 760 
Lease liability1,073 1,774 
Other497 718 
Total deferred tax assets$18,177 $25,613 
Deferred tax liabilities:
Premises and equipment$(988)$(986)
ASC 715 supplemental executive retirement plan asset(249)(249)
Research and development expenses(4,711)— 
Intangible assets(968)(1,900)
Right of use asset(1,038)(1,677)
Prepaid expenses(991)(936)
Other(541)(391)
Total deferred tax liabilities$(9,486)$(6,139)
Net deferred tax assets$8,691 $19,474 
(1)The deferred tax asset associated with the unrealized losses on investment securities is mainly a result of changes in interest rates, and the unrealized losses are considered to be temporary as the fair value is expected to recover as the investment securities approach their respective maturity dates. The issuers of the investment securities are of high credit quality and all principal amounts are expected to be paid when the investment securities mature. The Company does not intend to sell and it is more likely than not that the Company will not be required to sell the securities prior to their anticipated recovery.
A valuation allowance would be provided on deferred tax assets when it is more likely than not that some portion of the assets will not be realized. The Company has not established a valuation allowance at December 31, 2025 or 2024, due to management’s belief that it is more likely than not that the deferred tax asset is realizable.
The reconciliation of the beginning unrecognized tax benefits balance to the ending balance is presented in the following table:
(In thousands)202520242023
Balance at January 1$1,257 $1,397 $1,252 
Changes in unrecognized tax benefits as a result of tax positions taken during a prior year(52)(151)99 
Changes in unrecognized tax benefits as a result of tax position taken during the current year181 262 300 
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations(195)(251)(254)
Balance at December 31
$1,191 $1,257 $1,397 
At December 31, 2025, 2024 and 2023, the balances of the Company’s unrecognized tax benefits which would, if recognized, affect the Company’s effective tax rate were $1.2 million, $1.1 million and $1.3 million, respectively. These amounts are net of the offsetting expense from other taxing jurisdictions.
As of December 31, 2025, 2024 and 2023, the Company had $183,000, $70,000 and $117,000, respectively, in accrued interest related to unrecognized tax benefits.
The Company is subject to income tax in the U.S. federal jurisdiction, numerous state jurisdictions, and a foreign jurisdiction. The Company’s federal income tax returns for tax years 2022, 2023 and 2024 remain subject to examination by the Internal Revenue Service. In addition, the Company is subject to state tax examinations for the tax years 2021 through 2024.