Note 13 - Captive Subsidiary

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Contingencies Disclosure [Text Block]

13. Captive Subsidiary

As described in Note 1, the Company has a wholly-owned insurance subsidiary that previously provided property and casualty insurance coverage to the Company, the Bank and the Bank’s subsidiaries, and reinsurance to nine other third party insurance captives for which insurance may not have been available or economically feasible in the insurance marketplace.  On April 10, 2023, the IRS issued IR-2023-74 and proposed regulations that may result in the Captive being considered a listed transaction. As a result of the proposed regulations, management decided not to renew any of the outstanding insurance policies at the Captive when they matured in August 2023. The proposed regulations include the possibility of material tax expense to the consolidated group if finalized in their current form. However, the final regulations have not been published and as such management cannot reasonably estimate or determine the potential tax liability as of September 30, 2023.  Management continues to evaluate the proposed regulations but believes that upon issuance of the final regulations, the ultimate outcome will be the winding down and final closure of the Captive in December 2023.