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Note I - Income Taxes
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Income Tax Disclosure [Text Block]
NOTE I - INCOME TAXES:
 
Deferred taxes (or deferred charges) as of
December 31, 2020
and
2019,
included in other assets, were as follows (in thousands):
 
December 31,
 
2020
   
2019
 
                 
Deferred tax assets:
               
Allowance for loan losses
  $
930
    $
883
 
Employee benefit plans' liabilities
   
3,223
     
3,189
 
Loss on credit impairment of securities
   
356
     
356
 
Earned retiree health benefits plan liability
   
1,048
     
1,049
 
General business and AMT credits
   
1,707
     
1,707
 
Tax net operating loss carryforward
   
2,558
     
2,048
 
Other
   
854
     
863
 
Valuation allowance
   
(7,209
)    
(7,099
)
Deferred tax assets
   
3,467
     
2,996
 
Deferred tax liabilities:
               
Unrealized gain on available for sale securities, charged from equity
   
1,116
     
342
 
Unearned retiree health benefits plan asset
   
305
     
381
 
Bank premises and equipment
   
1,797
     
2,047
 
Other
   
249
     
226
 
Deferred tax liabilities
   
3,467
     
2,996
 
Net deferred taxes
  $       $    
 
Income taxes consist of the following components (in thousands):
 
Years Ended December 31,
 
2020
   
2019
      2018  
                         
Current
  $
 
    $
 
    $
(36
)
Deferred:
                       
Federal
   
(809
)    
166
     
(425
)
Change in valuation allowance
   
809
     
(166
)    
425
 
Total deferred
                       
Totals
  $
 
    $
 
    $
(36
)
 
Income taxes amounted to less than the amounts computed by applying the U.S. Federal income tax rate of
21.0%
for
2020,
2019
and
2018
income before income taxes. The reasons for these differences are shown below (in thousands):         
 
   
2020
   
2019
   
2018
 
   
Tax
   
Rate
   
Tax
   
Rate
   
Tax
   
Rate
 
Taxes computed at statutory rate
  $
(578
)    
(21
)   $
321
     
21
    $
125
     
21
 
Increase (decrease) resulting from:
                                               
Tax-exempt interest income
   
(127
)    
(5
)    
(172
)    
(11
)    
(206
)    
(35
)
Income from BOLI
   
(148
)    
(5
)    
(92
)    
(6
)    
(96
)    
(16
)
Federal tax credits
   
 
     
 
     
(20
)    
(1
)    
(298
)    
(50
)
Other
   
44
     
2
     
129
     
8
     
50
     
8
 
Realization of AMT credit
   
 
     
 
     
 
     
 
     
(36
)    
(6
)
Other changes in valuation allowance
   
809
     
29
     
(166
)    
(11
)    
425
     
72
 
                                                 
Total income tax (benefit) expense
  $
 
     
 
    $
 
     
 
    $
(36
)    
(6
)
 
During
2020
and
2019,
the Company recorded
no
income tax benefit or expense. During
2018,
the Company recorded an income tax benefit of
$36,000.
On
December 22, 2017,
the President signed into law The Tax Cuts and Jobs Act (the “Act”). In addition to reducing U.S. corporate income tax rates from
34%
to
21%,
the Act repealed the alternative minimum tax (“AMT”) regime for tax years beginning after
December 31, 2017.
For tax years beginning in
2018,
2019
and
2020,
the AMT credit carryforward can be utilized to offset regular tax with any remaining AMT carryforwards eligible for a refund of
50%.
Any remaining AMT credit carryforwards will become fully refundable beginning in the
2021
tax year. As a result, during
2018,
the Company reclassified the AMT credit carryforward to a tax receivable resulting in a deferred tax benefit of
$36,000.
 
A valuation allowance is recognized against deferred tax assets when, based on the consideration of all available positive and negative evidence using a more likely than
not
criteria, it is determined that all or a portion of these tax benefits
may
not
be realized. This assessment requires consideration of all sources of taxable income available to realize the deferred tax asset including taxable income in prior carry-back years, future reversals of existing temporary differences, tax planning strategies and future taxable income exclusive of reversing temporary differences and carryforwards. The Company incurred losses on a cumulative basis for the
three
-year period ended
December 31, 2014,
which is considered to be significant negative evidence. The positive evidence considered in support was insufficient to overcome this negative evidence. As a result, the Company established a full valuation allowance for its net deferred tax asset in the amount of
$8,140,000
as of
December 31, 2014.
 
The Company intends to maintain this valuation allowance until it determines it is more likely than
not
that the asset can be realized through current and future taxable income. If
not
utilized, the Company's federal net operating loss of
$12,091,000
will begin to expire in
2035.
 
The Company has reviewed its income tax positions and specifically considered the recognition and measurement requirements of the benefits recorded in its financial statements for tax positions taken or expected to be taken in its tax returns. The Company currently has
no
unrecognized tax benefits that, if recognized, would favorably affect the income tax rate in future periods.