Annual report pursuant to Section 13 and 15(d)

FEDERAL INCOME TAXES (Tables)

v3.19.3.a.u2
FEDERAL INCOME TAXES (Tables)
12 Months Ended
Dec. 31, 2019
FEDERAL INCOME TAXES [Abstract]  
Income Tax Expense
Income tax expense was as follows (dollars in thousands):

   
2019
   
2018
 
Current
 
$
7,172
   
$
5,377
 
Deferred
   
290
     
502
 
Change in valuation allowance
   
     
92
 
   
$
7,462
   
$
5,971
 
Reconciliation of Difference between Financial Statement Tax Expense and Amount Computed by Applying Statutory Federal Tax Rate to Pretax Income
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):

   
2019
   
2018
 
Statutory rate
   
21
%
   
21
%
Statutory rate applied to income before taxes
 
$
8,283
   
$
6,794
 
Adjust for:
               
Tax-exempt interest income
   
(703
)
   
(700
)
Bank-owned life insurance
   
(204
)
   
(198
)
Change in valuation allowance
   
     
92
 
Other, net
   
86
     
(17
)
   
$
7,462
   
$
5,971
 
Deferred Tax Assets and Liabilities
The net deferred tax asset recorded included the following amounts of deferred tax assets and liabilities (dollars in thousands):

   
2019
   
2018
 
Deferred tax assets
           
Allowance for loan losses
 
$
3,612
   
$
3,544
 
Nonaccrual loan interest
   
182
     
268
 
Valuation allowance on other real estate owned and property held for sale
   
76
     
218
 
Unrealized loss on securities available for sale
   
     
606
 
Other
   
248
     
302
 
Gross deferred tax assets
   
4,118
     
4,938
 
Valuation allowance
   
(92
)
   
(92
)
Total net deferred tax assets
   
4,026
     
4,846
 
                 
Deferred tax liabilities
               
Depreciation
 
$
(1,053
)
 
$
(1,005
)
Prepaid expenses
   
(172
)
   
(200
)
Unrealized gain on securities available for sale
   
(406
)
   
 
Other
   
(317
)
   
(261
)
Gross deferred tax liabilities
   
(1,948
)
   
(1,466
)
Net deferred tax asset
 
$
2,078
   
$
3,380