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.