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

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

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

	(Dollars in thousands)
	2013		2012
Federal:
Current	$	1,844	$	1,754
Deferred		276		146
State:
Current		44		35
Deferred, net of valuation allowance		233		6
Income tax expense	$	2,397	$	1,941

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

	(Dollars in thousands)
	2013			2012
Federal statutory rate		34	%		34	%
Tax expense at statutory rate	$	3,235		$	2,990
State tax, net of federal effect		183			27
Tax exempt income		(940)			(806)
Bank owned life insurance		(129)			(329)
Tax credits		-			-
Other		48			59
Total income tax expense	$	2,397		$	1,941

At year-end, the components of the net deferred tax asset recorded in the consolidated balance sheets are as follows:

	(Dollars in thousands)
	2013		2012
Deferred tax assets:
Bad debts	$	2,754	$	3,318
Deferred loan fees		96		99
Deferred compensation		483		486
Unrealized depreciation on securities available-for-sale, net		1,620		-
Net operating loss		642		875
Tax credits		78		73
Nonaccrual loan interest income		87		12
Restricted stock awards		35		26
REO writedowns		25		11
Unqualified DCP		60		55
Post retirement benefit		52		55
Other-than-temporary impairment		92		92
Accrued vacation		111		125
Impairment on land		75		75
Other		19		20
Total deferred tax assets		6,229		5,322

Deferred tax liabilities:
Depreciation		(1,232)		(1,284)
Prepaids		(270)		(272)
Mortgage servicing rights		(105)		(133)
Deferred stock dividends		(112)		(115)
Unrealized appreciation on securities available-for-sale, net		-		(1,246)
Post retirement unrealized gain		(42)		(40)
Other		(83)		(16)
Total deferred tax liabilities		(1,844)		(3,106)
Valuation allowance		(288)		(474)
Net deferred tax assets	$	4,097	$	1,742