Quarterly report pursuant to Section 13 or 15(d)

FEDERAL INCOME TAXES

v3.21.2
FEDERAL INCOME TAXES
9 Months Ended
Sep. 30, 2021
FEDERAL INCOME TAXES [Abstract]  
FEDERAL INCOME TAXES
NOTE 8 - FEDERAL INCOME TAXES



Income tax expense was as follows (dollars in thousands):


   
Three Months
Ended
September 30, 2021
   
Three Months
Ended
September 30, 2020
   
Nine Months
Ended
September 30, 2021
   
Nine Months
Ended
September 30, 2020
 
Current
 
$
936
   
$
1,304
   
$
4,685
   
$
5,974
 
Deferred
   
800
     
309
   
656
   
(1,174
)
   
$
1,736
   
$
1,613
   
$
5,341
   
$
4,800
 



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):


   
Three Months
Ended
September 30, 2021
   
Three Months
Ended
September 30, 2020
   
Nine Months
Ended
September 30, 2021
   
Nine Months
Ended
September 30, 2020
 
Statutory rate
   
21
%
   
21
%
   
21
%
   
21
%
Statutory rate applied to income before taxes
 
$
1,877
   
$
1,834
   
$
5,909
   
$
5,454
 
Deduct
                               
Tax-exempt interest income
   
(162
)
   
(178
)
   
(477
)
   
(533
)
Bank-owned life insurance
   
(54
)
   
(45
)
   
(165
)
   
(144
)
Other, net
   
75
     
2
     
74
   
23
 
   
$
1,736
   
$
1,613
   
$
5,341
   
$
4,800
 



The realization of deferred tax assets 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):


   
September 30,
2021
   
December 31,
2020
 
Deferred tax assets
           
Allowance for loan losses
 
$
3,472
   
$
3,656
 
Net deferred loan fees
   
519
   

822
 
Nonaccrual loan interest
   
69
     
120
 
Valuation allowance on other real estate owned
   
5
     
41
 
Other
   
389
     
499
 
Gross deferred tax assets
   
4,454
     
5,138
 
Valuation allowance
   
     
 
Total net deferred tax assets
   
4,454
     
5,138
 
Deferred tax liabilities
               
Depreciation
   
(1,260
)
   
(1,285
)
Prepaid expenses
   
(262
)
   
(170
)
Unrealized gain on securities available for sale
   
(397
)
   
(1,120
)
Other
   
(409
)
   
(504
)
Gross deferred tax liabilities
   
(2,328
)
   
(3,079
)
Net deferred tax asset
 
$
2,126
   
$
2,059
 



There were no unrecognized tax benefits at September 30, 2021 or December 31, 2020 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 2018.