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

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

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

	(Dollars in thousands)
	2014		2013
Federal:
Current	$	1,787	$	1,844
Deferred		88		276
State:
Current		50		44
Deferred, net of valuation allowance		228		233
Income tax expense	$	2,153	$	2,397

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

	(Dollars in thousands)
	2014			2013
Federal statutory rate		34	%		34	%
Tax expense at statutory rate	$	3,246		$	3,235
State tax, net of federal effect		183			183
Tax exempt income		(1,184	)		(940	)
Bank owned life insurance		(142	)		(129	)
Other		50			48
Total income tax expense	$	2,153		$	2,397

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

	(Dollars in thousands)
	2014			2013
Deferred tax assets:
Bad debts	$	2,372		$	2,754
Deferred loan fees		73			96
Deferred compensation		484			483
Unrealized depreciation on securities available-for-sale, net		-			1,620
Net operating loss, state		557			642
Tax credits		85			78
Nonaccrual loan interest income		62			87
Restricted stock awards		43			35
REO writedowns		24			25
Unqualified deferred compensation plan		63			60
Post retirement benefit		52			52
Other-than-temporary impairment		92			92
Accrued vacation		98			111
Impairment on land		71			75
Purchase accounting		47			-
Other		1			19
Total deferred tax assets		4,124			6,229

Deferred tax liabilities:
Depreciation		(1,034	)		(1,232	)
Prepaids		(337	)		(270	)
Mortgage servicing rights		(79	)		(105	)
Deferred stock dividends		(109	)		(112	)
Unrealized appreciation on securities available-for-sale, net		(826	)		-
Post retirement unrealized gain		(23	)		(42	)
Other		(105	)		(83	)
Total deferred tax liabilities		(2,513	)		(1,844	)
Valuation allowance		(257	)		(288	)
Net deferred tax asset	$	1,354		$	4,097