INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 13 - INCOME TAXES

Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act was enacted on December 22, 2017. Among other things, the new law (i) establishes a new, flat corporate federal statutory income tax rate of 21%, (ii) eliminated the corporate alternative minimum tax and allowed the use of any such carryforwards to offset regular tax liability for any taxable year, (iii) limited the deduction for net interest expense incurred by U.S. corporations, (iv) allowed businesses to immediately expense, for tax purposes, the cost of new investments in certain qualified depreciable assets, (v) eliminated or reduces certain deductions related to meals and entertainment expenses, (vi) modified the limitation on excessive employee remuneration to eliminate the exception for performance-based compensation and clarified the definition of a covered employee and (vii) limited the deductibility of deposit insurance premiums. The Tax Cuts and Jobs Act also significantly changed U.S. tax law related to foreign operations; however, such changes do not currently impact us.

As stated above, as a result of the enactment of the Tax Cuts and Jobs Act on December 22, 2017, we remeasured our deferred tax assets and liabilities based upon the newly enacted U.S. statutory federal income tax rate of 21%, which is the tax rate at which these assets and liabilities are expected to reverse in the future.

Management of the Company considers the likelihood of changes by taxing authorities in its filed income tax returns and discloses potential significant changes that management believes are more likely than not to occur upon examination by tax authorities. Management has not identified any uncertain tax positions in previously filed income tax returns that require disclosure in the accompanying consolidated financial statements. The Company is subject to U.S. federal income taxes.

The consolidated provision for income taxes was as follows as of December 31:

	2021			2020			2019
Current federal tax expense	$	8,893		$	10,542		$	6,097
Deferred federal tax benefit		(143	)		(4,647	)		(319	)
Total	$	8,750		$	5,895		$	5,778

The provision for federal income taxes differs from that computed by applying federal statutory rates to income before federal income tax expense, as indicated in the following analysis as of December 31:

	2021			2020			2019
Federal statutory income tax at 21%	$	10,197		$	6,992		$	6,732
Tax exempt interest income		(1,043	)		(1,065	)		(1,027	)
Earnings of bank owned life insurance		(235	)		(182	)		(192	)
Nondeductible expenses		180			356			462
Other		(349	)		(206	)		(197	)
Total	$	8,750		$	5,895		$	5,778

The following table summarizes the components of our deferred tax assets and liabilities as of December 31, 2021 and 2020. Our net deferred tax assets are included in other assets in the accompanying consolidated balance sheets.

	2021			2020
Deferred tax assets:
Allowance for credit losses	$	6,391		$	7,060
Deferred compensation		1,043			920
Bonus accrual		499			422
Deferred loan fees, net		253			259
Accretion of acquisition allowance		72			112
Other real estate owned		—			2
Other		397			437
Total deferred tax assets		8,655			9,212
Deferred tax liabilities:
Unrealized gain on available for sale securities		(122	)		(3,717	)
Premises and equipment		(2,138	)		(2,721	)
Prepaid expenses		(306	)		(343	)
Intangibles		(266	)		(350	)
Other		(46	)		(42	)
Total deferred tax liabilities		(2,878	)		(7,173	)
Net deferred tax asset	$	5,777		$	2,039