Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes [Abstract]

Income Taxes

Note 10: Income Taxes

The (benefit)/provision for income taxes for the years ended December 31, 2021, 2020 and 2019 consists of the following (dollars in thousands):

	Year Ended December 31,
	2021		2020			2019
Federal:
Current	$	6,204	$	5,944		$	5,516
Deferred		90		(684	)		-
Total federal tax provision	$	6,294	$	5,260		$	5,516
State:
Current	$	1,440	$	1,549		$	1,308
Deferred		21		(191	)		20
Total state tax provision	$	1,461	$	1,358		$	1,328
Total income tax provision	$	7,755	$	6,618		$	6,844

The provision for income taxes for the years ended December 31, 2021, 2020 and 2019 differs from the federal rate of 21% due to the following:

	Year Ended December 31,
	2021			2020			2019
Statutory U.S. Federal Income Tax	$	6,492		$	5,434		$	3,160
Increase (decrease) resulting from:
State Taxes		1,214			1,077			1,048
Permanent Differences		121			118			2,327
Other		(72	)		(11	)		309
Provision for income taxes	$	7,755		$	6,618		$	6,844

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

	Year Ended December 31,
	2021			2020
Deferred tax assets:
Allowance for loan losses	$	2,413		$	2,395
Non-accrual loans		135			156
Deferred revenue		285			302
Discounts and premiums on assets acquired		318			-
Deferred compensation		253			152
Total deferred tax assets	$	3,404		$	3,005
Deferred tax liabilities:
Property and equipment	$	(1,189	)	$	(753	)
Intangible assets		(473	)		(180	)
Prepaid expenses		(25	)		(94	)
Net unrealized (loss) on available for sale securities		(478	)		-
Other		(15	)		(14	)
Total deferred tax liabilities	$	(2,180	)	$	(1,041	)
Net deferred tax assets	$	1,224		$	1,964

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, 2021.

The Company does not have any net operating loss or tax credit carryforwards as of December 31, 2021.

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,
	2021		2020
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, 2021, 2020, and 2019.