v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the income tax expense for the Company, all of which are in the United States, for the year December 31, 2025:
(dollars in thousands)2025
Current:
  Federal
$11,563 
  State
270 
    Total
11,833 
Deferred:
  Federal
$123 
  State
— 
    Total
123 
Total income tax expense
$11,956 
The Company files federal income tax returns on a calendar year basis. Income tax expense for the years indicated is summarized as follows:
(dollars in thousands)20242023
Current$9,583 $10,722 
Deferred(44)(33)
Historic Tax Credits ("HTC")
(303)(303)
New Markets Tax Credits ("NMTC")
(480)(480)
Total income tax expense$8,756 $9,906 
The following table presents income taxes paid, net of refunds for the year December 31, 2025:
(dollars in thousands)2025
  Federal
$13,100 
  State
270 
    Total(1)
$13,370 
(1) No individual jurisdiction other than federal represented 5% or more of the total income taxes paid for the year December 31, 2025.
The components of the Company’s net deferred tax asset, which is included in accrued interest receivable and other assets in the accompanying Statement of Financial Condition at December 31 of the years indicated are as follows:
(dollars in thousands)20252024
Deferred tax assets:
Provision for loan losses$7,301 $7,479 
Discount on purchased loans222 474 
Salary continuation plan635 619 
Mortgage servicing rights— 13 
Deferred compensation6 6 
Stock-based compensation287 280 
Unrealized loss on securities available for sale4,922 8,613 
Net operating loss acquired— 61 
HTC
124 83 
Other218 173 
Deferred tax assets$13,715 $17,801 
Deferred tax liabilities:
FHLB stock dividends$(88)$(161)
Accumulated depreciation(3,039)(3,110)
Intangible assets(433)(619)
Derivatives(190)(643)
NMTC— (188)
Other(45)(45)
Deferred tax liabilities(3,795)(4,766)
Net deferred tax asset$9,920 $13,035 

No valuation allowance was necessary on deferred tax assets as of December 31, 2025 and 2024.

The following is a reconciliation of the Company's effective tax rate to the U.S. federal statutory income tax rate for the year ended December 31, 2025:
Year Ended December 31,
(dollars in thousands)2025
AmountRate
U.S. federal statutory income tax rate$12,184 21.0 %
State taxes, net of federal income tax effect(1)
214 0.4 %
Tax credits(321)(0.6)%
Bank-owned life insurance income(238)(0.4)%
ESOP related expenses
222 0.4 %
Stock compensation related benefits
(227)(0.4)%
Other items, net122 0.2 %
Total income tax expense$11,956 20.6 %
(1)For the year presented, Texas and Mississippi make up the taxes in this category.
For the years ended December 31, 2024 and 2023, the Company’s provision for federal income taxes differed from the amount computed by applying the federal income tax statutory rate of 21% on income from operations as indicated in the following analysis:
(dollars in thousands)20242023
Federal tax based on statutory rate$9,548 $10,658 
State tax based on statutory rate205 175 
Increase (decrease) resulting from:
HTC
(303)(303)
NMTC(480)(480)
Effect of tax-exempt income(105)(155)
Changes in the cash surrender value of bank owned life insurance(231)(219)
Nondeductible share based compensation expense151 161 
Exercise of stock options(104)(50)
Other75 119 
Income tax expense$8,756 $9,906 
Effective tax rate19.4 %19.8 %
Retained earnings as of December 31, 2025 and 2024, included $5,837,000 for which no deferred federal income tax liability has been recognized. This amount represents an allocation of income to bad debt deductions for tax purposes only. Reductions of amounts so allocated for purposes other than bad debt losses would create income for tax purposes only, which would be subject to the then-current federal statutory income tax rate. The unrecorded deferred income tax liability on the above amount was $1,985,000 as of December 31, 2025 and 2024. Current accounting standards do not require the accrual of this deferred tax amount to be recorded unless it is probable that the reserve (for tax purposes) will be significantly depleted by loan losses deductible for tax purposes in the future. Based on current estimates of losses within the Company’s loan portfolio, accrual of the deferred tax liability associated with this reserve was not required as of December 31, 2025 and 2024.