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.