Note 9:

Income Taxes

In connection with the initial public offering, as discussed in Note 2, the Company terminated its S Corporation status and became a taxable entity (“C Corporation”) effective September 24, 2018.

The (benefit)/provision for income taxes for the years ended December 31, 2020, 2019 and 2018 consists of the following (dollars in thousands):

	Year Ended December 31,
	2020			2019		2018

Federal:
Current	$	5,944		$	5,516	$	1,563
Deferred		(684	)		-		(1,036	)
Total federal tax provision	$	5,260		$	5,516	$	527

State:
Current	$	1,549		$	1,308	$	303
Deferred		(191	)		20		(33	)
Total state tax provision	$	1,358		$	1,328	$	270

Total income tax provision	$	6,618		$	6,844	$	797

The provision for income taxes for the years ended December 31, 2020, 2019 and 2018 differs from the federal rate of 21% due to the following:

	Year Ended December 31,
	2020			2019		2018

Statutory U.S. Federal Income Tax	$	5,434		$	3,160	$	5,417
Increase (decrease) resulting from:
State Taxes		1,077			1,048		213
Benefit of S corporation status		-			-		(3,933	)
Permanent Differences		118			2,327		-
Conversion as of September 24, 2018 to C Corporation		-			-		(863	)
Other		(11	)		309		(37	)
Provision for income taxes	$	6,618		$	6,844	$	797

Deferred tax assets (liabilities) included in other assets in the accompanying consolidated balance sheet consist of the following:

	Year Ended December 31,
	2020			2019
Deferred tax assets:
Allowance for loan losses	$	2,395		$	1,918
Non-accrual loans		156			60
Deferred revenue		302			165
Deferred compensation		152			78
Total deferred tax assets	$	3,005		$	2,221

Deferred tax liabilities:
Property and equipment	$	(753	)	$	(320	)
Intangible assets		(180	)		(202	)
Prepaid expenses		(94	)		(122	)
Method change IRC 481(a)		-			(476	)
Other		(14	)		(12	)
Total deferred tax liabilities	$	(1,041	)	$	(1,132	)

Net deferred tax assets	$	1,964		$	1,089

In assessing the Company’s ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize all benefits related to these deductible differences as of December 31, 2020.

The Company does not have any net operating loss or tax credit carryforwards as of December 31, 2020.

The Company is not presently under examination by the Internal Revenue Service or any state tax authority.

The Company establishes reserves for uncertain tax positions that reflect management’s best estimate of deductions and credits that may not be sustained on a more-likely-than-not basis. Recognized income tax positions are measured at the largest amount that is considered greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. A reconciliation of the beginning and ending amount of uncertain tax positions is as follows (in thousands):

	For the Year Ended December 31,
	2020		2019

Balance at beginning of year	$	13	$	13
Additions for positions taken in prior years		-		-
Reductions for positions taken in prior years		-		-
Balance at end of year	$	13	$	13

There were no interest or penalties related to uncertain tax positions reflected in the consolidated statements of income for the years ended December 31, 2020, 2019, and 2018.