FEDERAL INCOME TAXES (Tables)

3 Months Ended

Mar. 31, 2021

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

	Three Months Ended March 31, 2021			Three Months Ended March 31, 2020
Current	$	2,294		$	1,700
Deferred		(528	)		(271	)
	$	1,766		$	1,429

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):

	Three Months Ended March 31, 2021			Three Months Ended March 31, 2020
Statutory rate		21	%		21	%
Statutory rate applied to income before taxes	$	2,004		$	1,646
Deduct
Tax-exempt interest income		(159	)		(178	)
Bank-owned life insurance		(58	)		(51	)
Other, net		(21	)		12
	$	1,766		$	1,429

Deferred Tax Assets and Liabilities

The net deferred tax asset recorded included the following amounts of deferred tax assets and liabilities (dollars in thousands):

	March 31, 2021			December 31, 2020
Deferred tax assets
Allowance for loan losses	$	3,665		$	3,656
Net deferred loan fees		1,309		$	822
Nonaccrual loan interest		96			120
Valuation allowance on other real estate owned		22			41
Unrealized loss on securities available for sale		—			—
Other		525			499
Gross deferred tax assets		5,617			5,138
Valuation allowance		—			—
Total net deferred tax assets		5,617			5,138
Deferred tax liabilities
Depreciation		(1,238	)		(1,285	)
Prepaid expenses		(170	)		(170	)
Unrealized gain on securities available for sale		(409	)		(1,120	)
Other		(502	)		(504	)
Gross deferred tax liabilities		(2,319	)		(3,079	)
Net deferred tax asset	$	3,298		$	2,059