PLUMAS BANCORP Income Taxes Disclosure

15.	INCOME TAXES

 

The provision for income taxes for the years ended December 31, 2024, 2023 and 2022 consisted of the following:

 

2024		Federal				State				Total
Current		$	6,896,000			$	3,540,000			$	10,436,000
Deferred			75,000				(129,000	)			(54,000	)
Provision for income taxes		$	6,971,000			$	3,411,000			$	10,382,000

 

2023		Federal				State				Total
Current		$	7,310,000			$	3,827,000			$	11,137,000
Deferred			(582,000	)			(120,000	)			(702,000	)
Provision for income taxes		$	6,728,000			$	3,707,000			$	10,435,000

  

2022		Federal				State				Total
Current		$	5,398,000			$	2,794,000			$	8,192,000
Deferred			686,000				347,000				1,033,000
Provision for income taxes		$	6,084,000			$	3,141,000			$	9,225,000

 

 

Deferred tax assets (liabilities) consisted of the following:

 

		December 31,
		2024				2023
Deferred tax assets:
Allowance for credit losses		$	3,714,000			$	3,449,000
Deferred compensation			1,166,000				1,127,000
State taxes			734,000				804,000
Premises and equipment			190,000				619,000
Unrealized loss on available-for-sale investment securities			10,552,000				13,625,000
Lease Liability			6,968,000				860,000
Other			1,144,000				815,000
Total deferred tax assets			24,468,000				21,299,000
Deferred tax liabilities:
Deferred loan costs			(1,397,000	)			(1,259,000	)
Purchase accounting adjustments			(249,000	)			(306,000	)
Right-of-use assets			(6,849,000	)			(840,000	)
Other			(241,000	)			(143,000	)
Total deferred tax liabilities			(8,736,000	)			(2,548,000	)
Net deferred tax assets		$	15,732,000			$	18,751,000

 

Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the reported amount of assets and liabilities and their tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The determination of the amount of deferred income tax assets which are more likely than not to be realized is primarily dependent on projections of future earnings, which are subject to uncertainty and estimates that may change given economic conditions and other factors. The realization of deferred income tax assets is assessed and a valuation allowance is recorded if it is "more likely than not" that all or a portion of the deferred tax asset will not be realized. "More likely than not" is defined as greater than a 50% chance. All available evidence, both positive and negative is considered to determine whether, based on the weight of that evidence, a valuation allowance is needed.

 

At December 31, 2024 total deferred tax assets were approximately $24,468,000 and total deferred tax liabilities were approximately $8,736,000 for a net deferred tax asset of $15,732,000. The Company’s deferred tax assets primarily relate to timing differences in the tax deductibility of unrealized losses on investment securities, deprecation on premises and equipment, the provision for credit losses and deferred compensation. Based upon our analysis of available evidence, management of the Company determined that it is "more likely than not" that all of our deferred income tax assets as of December 31, 2024 and 2023 will be fully realized and therefore no valuation allowance was recorded. On the consolidated balance sheet, net deferred tax assets are included in accrued interest receivable and other assets.

 

 

The Company recognized, as components of tax expense, tax credits and other tax benefits, and amortization expense relating to our investment in Qualified Affordable House Projects as follows:

 

		December 31, 2024		December 31, 2023				December 31, 2022
Tax credits and other tax benefits - decrease in tax expense	$	305,928		$	142,691		$	33,305
Amortization - increase in tax expense	$	237,753		$	93,012		$	19,474

 

The carrying value of Low-Income Housing Tax Credit Funds was $2,150,000 and $2,388,000 as of December 31, 2024 and 2023, respectively. As of December 31, 2024, the Company has committed to make additional capital contributions to the Low-Income Housing Tax Credit Funds in the amount of $1,277,000, and these contributions are expected to be made over the next several years.

 

The provision for income taxes differs from amounts computed by applying the statutory Federal income tax rate to operating income before income taxes. The significant items comprising these differences consisted of the following:

 

		2024				2023				2022
Federal income tax, at statutory rate			21.0	%			21.0	%			21.0	%
State franchise tax, net of Federal tax effect			7.0				7.0				7.0
Interest on obligations of states and political subdivisions			(1.2	)			(1.8	)			(1.6	)
Net increase in cash surrender value of bank owned life insurance			(0.2	)			(0.2	)			(0.2	)
Other			-				-				(0.3	)
Effective tax rate			26.6	%			26.0	%			25.9	%

 

The Company and its subsidiary file income tax returns in the U.S. federal and applicable state jurisdictions. The Company conducts all of its business activities in the states of California, Nevada, Oregon and Utah. There are currently no pending U.S. federal, state, and local income tax or non-U.S. income tax examinations by tax authorities.

 

With few exceptions, the Company is no longer subject to tax examinations by U.S. Federal taxing authorities for years ended before December 31, 2021, and by state and local taxing authorities for years ended before December 31, 2020.

 

The unrecognized tax benefits and changes therein and the interest and penalties accrued by the Company as of or during the years ended December 31, 2024 and 2023 were not significant. The Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months.