Finward Bancorp Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

At year-end, components of income tax expense consist of the following:

	(Dollars in thousands)
	2018			2017
Federal:
Current	$	1,218		$	1,898
Deferred		129			275
Revaluation of net deferred tax asset		-			517
State:
Current		(44	)		77
Deferred, net of valuation allowance		127			102
Income tax expense	$	1,430		$	2,869

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

Effective tax rates differ from the federal statutory rate of 21% for 2018 and 34% for 2017 applied to income before income taxes due to the following:

	(Dollars in thousands)
	2018			2017
Federal statutory rate		21	%		34	%
Tax expense at statutory rate	$	2,260		$	4,022
State tax, net of federal effect		66			118
Tax exempt income		(778	)		(1,302	)
Bank owned life insurance		(102	)		(156	)
Captive insurance		(169	)		(307	)
Revaluation of net deferred tax asset		-			517
Non-deductible transaction costs		99			-
Other		54			(23	)
Total income tax expense	$	1,430		$	2,869

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

At December 31, the components of the net deferred tax asset recorded in the consolidated balance sheets are as follows:

	(Dollars in thousands)
	2018			2017
Deferred tax assets:
Bad debts	$	1,859		$	1,885
Deferred loan fees		49			32
Deferred compensation		322			332
Unrealized depreciation on securities available-for-sale, net		743			-
Net operating loss		1,373			290
Tax credits		147			99
Nonaccrual loan interest income		62			71
Share based compensation		185			133
REO writedowns		195			25
Unqualified deferred compensation plan		54			51
Other-than-temporary impairment		52			57
Accrued vacation		56			59
Impairment on land		48			48
Other		78			15
Total deferred tax assets		5,223			3,097

Deferred tax liabilities:
Depreciation		(550	)		(641	)
Prepaids		(254	)		(237	)
Mortgage servicing rights		(68	)		(26	)
Deferred stock dividends		(76	)		(65	)
Unrealized appreciation on securities available-for-sale, net		-			(188	)
Purchase accounting		(118	)		(100	)
Other		(191	)		(209	)
Total deferred tax liabilities		(1,257	)		(1,466	)
Valuation allowance		(87	)		(80	)
Net deferred tax asset	$	3,879		$	1,551