Annual report pursuant to Section 13 and 15(d)

FEDERAL INCOME TAXES

v3.22.4
FEDERAL INCOME TAXES
 12 Months Ended
Dec. 31, 2022
FEDERAL INCOME TAXES [Abstract]  
FEDERAL INCOME TAXES
NOTE 16 - FEDERAL INCOME TAXES
 
Income tax expense was as follows (dollars in thousands):

   
2022
    
2021
  
Current
  
$
7,567
    
$
5,615
  
Deferred
    
766
      
1,095
   
$
8,333
    
$
6,710
  

The difference between the financial statement tax expense and amount computed by applying the statutory federal tax rate to pretax income was reconciled as follows (dollars in thousands):

   
2022
    
2021
  
Statutory rate
    
21
%
    
21
%
Statutory rate applied to income before taxes
  
$
9,044
    
$
7,502
  
Adjust for:
                
Tax-exempt interest income
    
(589
)
    
(642
)
Bank-owned life insurance
    
(184
)
    
(217
)
Other, net
    
62
      
67
   
$
8,333
    
$
6,710
  

The realization of deferred tax assets (net of a recorded valuation allowance) is largely dependent upon future taxable income, future reversals of existing taxable temporary differences and the ability to carryback losses to available tax years. In assessing the need for a valuation allowance, we consider positive and negative evidence, including taxable income in carry-back years, scheduled reversals of deferred tax liabilities, expected future taxable income and tax planning strategies. Management believes it is more likely than not that all of the deferred tax assets will be realized against deferred tax liabilities and projected future taxable income.
 
The net deferred tax asset recorded included the following amounts of deferred tax assets and liabilities (dollars in thousands):

   
2022
    
2021
  
Deferred tax assets
            
Allowance for loan losses
  
$
3,210
    
$
3,337
  
Net deferred loan fees
    
—
      
275
  
Nonaccrual loan interest
    
12
      
57
  
Valuation allowance on other real estate owned and property held for sale
    
—
      
6
  
Unrealized loss on securities available for sale
    
8,394
      
79
  
Other
    
257
      
311
  
Gross deferred tax assets
    
11,873
      
4,065
  
Valuation allowance
    
—
      
—
  
Total net deferred tax assets
    
11,873
      
4,065
  
                 
Deferred tax liabilities
                
Depreciation
  
$
(1,098
)
  
$
(1,199
)
Prepaid expenses
    
(309
)
    
(288
)
Net deferred loan costs
    
(21
)
    
—
  
Other
    
(733
)
    
(415
)
Gross deferred tax liabilities
    
(2,161
)
    
(1,902
)
Net deferred tax asset
  
$
9,712
    
$
2,163
  

NOTE 16 - FEDERAL INCOME TAXES (Continued)

There were no unrecognized tax benefits at December 31, 2022 and 2021 and the Company does not expect the total amount of unrecognized tax benefits to significantly increase or decrease in the next twelve months. The Company is no longer subject to examination by the Internal Revenue Service for years before 2019.