v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
10.
INCOME TAXES

The consolidated provisions for income taxes for the years ended December 31, 2025 and 2024 were as follows:

 

 

 

2025

 

 

2024

 

 

 

(Dollars in Thousands)

 

Current taxes

 

 

 

 

 

 

Federal

 

$

1,508

 

 

$

1,458

 

State

 

 

386

 

 

 

543

 

Total current taxes

 

 

1,894

 

 

 

2,001

 

Deferred taxes

 

 

 

 

 

 

Federal

 

 

33

 

 

 

538

 

State

 

 

17

 

 

 

45

 

Total deferred

 

 

50

 

 

 

583

 

Total tax provision

 

$

1,944

 

 

$

2,584

 

 

 

 

The Company has elected to prospectively adopt the guidance in ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures. The following table reconciles the U.S. federal statutory income tax rate of 21% to the Company’s effective income tax rate for the year ended December 31, 2025.

 

 

 

2025

 

 

 

Amount

 

 

Percent

 

 

 

(Dollars in Thousands)

 

Income before provision for income taxes

 

$

7,936

 

 

 

 

 

 

 

 

 

 

 

US federal statutory tax rate

 

 

1,667

 

 

 

21.0

%

State and local income taxes, net of federal income tax effect (1)

 

 

317

 

 

 

4.0

%

Nontaxable or nondeductible items

 

 

(65

)

 

 

-0.8

%

Other reconciling items (2)

 

 

25

 

 

 

0.3

%

Total

 

$

1,944

 

 

 

24.5

%

 

(1) State taxes in Alabama made up the majority of the tax effect of this category. The Company has no foreign operations and does not file income tax returns in foreign jurisdictions.

(2) No individual component of this category was material to the rate reconciliation.

 

The following table details how the consolidated tax expense differed from the amount computed by applying the Company's federal statutory income tax rate of 21% in 2024, prior to the adoption of ASU 2023-09:

 

2024

 

 

 

 

Income tax expense at federal statutory rate

$

2,258

 

Increase (decrease) resulting from:

 

 

Tax-exempt interest

 

(52

)

Bank-owned life insurance

 

(74

)

State income tax expense, net of federal income tax effect

 

414

 

Apportionment and state rate changes

 

119

 

Other

 

(81

)

Total

$

2,584

 

 

 

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, 2025 and 2024 are presented below:

 

 

 

2025

 

 

2024

 

 

 

(Dollars in Thousands)

 

Deferred tax assets:

 

 

 

 

 

 

Allowance for credit losses

 

$

2,809

 

 

$

2,657

 

Deferred compensation

 

 

562

 

 

 

749

 

Deferred commissions and fees

 

 

289

 

 

 

368

 

Unrealized loss on securities available-for-sale

 

 

240

 

 

 

1,676

 

Other

 

 

538

 

 

 

554

 

Total gross deferred tax assets

 

 

4,438

 

 

 

6,004

 

Deferred tax liabilities:

 

 

 

 

 

 

Premises and equipment

 

 

1,293

 

 

 

1,329

 

Core deposit intangible

 

 

—

 

 

 

12

 

Limited partnerships

 

 

114

 

 

 

112

 

Unrealized gain on cash flow hedges

 

 

—

 

 

 

227

 

Other

 

 

206

 

 

 

260

 

Total gross deferred tax liabilities

 

 

1,613

 

 

 

1,940

 

Net deferred tax asset, included in other assets

 

$

2,825

 

 

$

4,064

 

 

Income taxes paid, net of refunds, are presented in the supplemental disclosures of cash flow information in Note 2.

 

The Company had no deferred tax valuation allowance as of December 31, 2025 or 2024. The Company did not have any federal or state net operating loss carryforwards as of December 31, 2025 or December 31, 2024. The Company files income tax returns with the federal government and several states. The majority of its income is attributable to the states of Alabama and Tennessee. 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, 2022 through 2025.

As of December 31, 2025, 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, 2025. As of December 31, 2025, the Company had accrued no interest and no penalties related to uncertain tax positions.