INCOME TAXES |
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Jun. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES |
The income tax provision (benefit) consists of the following for the three and six months ended June 30, 2026 and June 30, 2025:
Income taxes paid, net of refunds:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The composition of the net deferred tax asset consists of the following at June 30, 2026 and December 31, 2025:
The valuation allowance for deferred tax assets primarily relates to uncertainty regarding the utilization of net operating loss (“NOL”) carryforwards acquired in the merger with Home Building and Loan Company. The Internal Revenue Code imposes an annual limitation on the utilization of NOLs acquired in certain mergers, which restricts the amount of taxable income that may be offset in any given year. The NOLs subject to this limitation expire in years 2026 through 2034. Due to the interaction of the annual utilization limitation and the expiration periods, the remaining amount of acquired NOL carryforwards that is expected to be realizable totals approximately $1.0 million. For the three and six months ended June 30, 2026, the Bank did not reduce its valuation allowance. Certain bad debt deductions arising prior to 1988 are subject to special tax rules applicable to former thrift institutions. Deferred tax liabilities related to these deductions are recognized only if it becomes apparent that the related temporary differences will reverse in the foreseeable future. Management does not contemplate any actions that would cause these deductions to become taxable, and accordingly, no deferred tax liability has been recorded. |
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