Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes [Abstract]

Income Taxes

(18) Income Taxes

The provision for income tax expense consisted of the following for the years ended December 31:

	2021		2020
Current:
Federal	$	2,553	$	3,689
State		1,687		2,241
		4,240		5,930
Deferred:
Federal		652		(929	)
State		348		(500	)
		1,000		(1,429	)
	$	5,240	$	4,501

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2021 and 2020, consisted of:

	2021		2020
Deferred tax assets:
Allowance for loan losses	$	4,317	$	4,838
Deferred compensation		91		101
Retirement compensation		1,559		1,456
Stock option compensation		311		256
Postretirement benefits		578		871
Current state franchise taxes		322		467
Non-accrual interest		291		484
Sale-leaseback		26		51
Lease liability		1,667		1,900
Investment securities unrealized loss		1,115		—
Other		246		252
Deferred tax assets		10,523		10,676
Deferred tax liabilities:
Fixed assets depreciation		1,320		1,357
FHLB dividends		184		184
Tax credit – loss on pass-through		400		499
Deferred loan costs		1,010		823
Mortgage servicing rights		288		143
Investment securities unrealized gain		—		2,903
Right of Use Asset		1,519		1,748
Other		147		89
Total deferred tax liabilities		4,868		7,746
Net deferred tax assets (see Note 7)	$	5,655	$	2,930

Based upon the level of historical taxable income and projections for future taxable income over the periods during which the deferred tax assets are deductible, management believed it is more-likely-than-not the Company will realize the benefits of these deductible differences.

At December 31, 2021, the Company had no state net operating loss carry forwards and no federal tax credit carry forwards.

A reconciliation of income taxes computed at the federal statutory rate and the provision for income taxes for the years ended December 31, is as follows:

	2021			2020
Federal statutory income tax rate		21.0	%		21.0	%
Increase (decrease) in tax rate due to:
State franchise tax, net of federal benefit		8.3	%		8.3	%
Reduction for tax exempt interest		(1.6	)%		(1.7	)%
Cash surrender value of life insurance		(0.5	)%		(0.6	)%
Other tax credits		0.0	%		0.0	%
Other		(0.2	)%		0.1	%
Effective income tax rate		27.0	%		27.1	%

Accounting for Uncertainty in Income Taxes

The Company had no unrecognized tax benefits for the years ended December 31, 2021 and 2020.  The Company recognized no changes in unrecognized tax benefits during 2021 and 2020, due to the expiration of a statute of limitations.  The Company had no significant uncertain tax positions as of December 31, 2021 and December 31, 2020.  The Company does not currently anticipate any significant increase or decrease in unrecognized tax benefits during 2022.

The Company classifies interest and penalties as a component of the provision for income taxes. At December 31, 2021, there were no unrecognized interest and penalties. The tax years ended December 31, 2020, 2019, and 2018 remain subject to examination by the Internal Revenue Service. The tax years ended December 31, 2020, 2019, 2018, and 2017 remain subject to examination by the California Franchise Tax Board. The deductibility of these tax positions will be determined through examination by the appropriate tax authorities or the expiration of the tax statute of limitations.

On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company has evaluated the impact of the CARES Act and determined that none of the changes would result in a material income tax benefit to the Company.

On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law and extends several provisions of the CARES Act. As of December 31, 2021, the Company has determined that neither this Act nor changes to income tax laws or regulations in other jurisdictions have a significant impact on our effective tax rate.