INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of income tax expense (benefit)

The following presents the components of the Company’s income tax expense as of December 31 (dollars in thousands):


	2022		2021
Current:
Federal	$	5,637	$	6,228
State and local	936		1,110
Total current tax expense	6,573		7,338
Deferred:
Federal	536		(734)
State and local	(55)		66
Valuation allowance	76		—
Total deferred tax expense (benefit)	557		(668)
Income tax expense	$	7,130	$	6,670

Schedule of reconciliation of income tax (expense) benefit

The following is a reconciliation of income taxes reflected on the Consolidated Statements of Income for the years ended December 31, 2022 and 2021, with income tax expense computed by applying the United States federal income tax rate of 21% to income before income taxes (dollars in thousands):


	2022		2021
Income tax expense computed at 21% statutory rate	$	6,054	$	5,729
Differences:
Permanent differences	101		169
State taxes, net of federal expense	1,005		1,018
LIHTC investment tax credit	(404)		(386)
LIHTC investment proportional amortization	378		539
Valuation allowance	76		—
Other, net	(80)		(399)
Income tax expense	$	7,130	$	6,670

Schedule of principal components of deferred tax assets (liabilities)

The following presents the principal components of the Company’s deferred tax items as of December 31 (dollars in thousands):


	2022		2021
Deferred tax assets:
Net operating loss carryforwards	$	472	$	395
Allowance for loan losses	4,165		3,385
Acquired loans fair market value adjustments	826		976
Assets acquired at fair value	—		226
Loans accounted for under the fair value option	146		—
Deferred rent	621		753
Stock-based compensation	1,705		1,800
Provision on other real estate owned	—		463
Other intangible assets	254		279
Unrealized losses on securities	495		—
Accrued bonuses	—		868
Loan fees	459		—
Accrued expenses	—		821
Other	1,574		382
Total deferred tax assets	10,717		10,348
Deferred tax liabilities:
Goodwill	(1,087)		(1,137)
Depreciation	(1,864)		(1,636)
Unrealized gain on securities	—		(73)
Loan fees	—		(155)
Acquired loans fair market value adjustments	(215)		—
Other	(189)		(130)
Total deferred tax liabilities	(3,355)		(3,131)
Net operating loss valuation allowance	(448)		(372)
Net deferred tax asset	$	6,914	$	6,845