Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 7 - INCOME TAXES

The components of income tax expense (benefit) for the years ended December 31, 2021 and 2020 are as follows:

	2021			2020
Current - Alternative minimum tax	$	14,390		$	3,000
Deferred		(62,721	)		(212,222	)
Utilization of operating loss carryforward		849,585			238,918
Change in valuation allowance		21,759			10,058
	$	823,013		$	39,754

The difference between the actual income tax expense and the amount computed by applying the statutory federal income tax rate to income before income taxes for the years ended December 31, 2021 and 2020 , is as follows:

	2021			2020
Pretax income at statutory rate	$	727,329		$	72,956
Add (deduct):
State income tax expense, net of federal benefit		114,775			13,469
Tax-exempt income		(68,496	)		(63,192	)
Change in valuation allowance		21,759			10,058
Other		27,646			6,463
	$	823,013		$	39,754

The following summarizes the sources and expected tax consequences of future taxable deductions or income, which comprise the net deferred tax asset, which is included as a component of other assets at December 31, 2021 and 2020:

	2021			2020
Deferred income tax assets:
Deferred compensation	$	295,006		$	254,526
Net operating loss carryforward		1,333,553			2,183,138
Other real estate owned		26,804			2,688
Charitable contributions		—			64,038
State tax credits		198,221			176,462
Defined benefit obligations (non-qualified)		490,528			812,019
Director deferred fee practice		—			22,379
Non-accrual loans		126,915			108,320
Frozen pension accrual (tax qualified)		327,425			375,275
Unrealized loss on investment securities available-for-sale		64,467			—
Other		24,412			3,848
Total gross deferred tax assets		2,887,331			4,002,693
Less: Valuation allowance		(198,221	)		(176,462	)
Net deferred tax asset		2,689,110			3,826,231
Deferred income tax liabilities:
Premises and equipment		14,021			36,005
Allowance for loan losses		120,539			151,516
Unrealized gain on investment securities available-for-sale		—			138,905
Director fee plan		8,663			—
Other		3,863			—
Total gross deferred tax liabilities		147,086			326,426
Net deferred tax asset	$	2,542,024		$	3,499,805

The future tax consequences of the differences between the financial reporting and tax basis of the Bank’s assets and liabilities resulted in a net deferred tax asset. A valuation allowance in the amount of $198,221 and $176,462 as of December 31, 2021 and 2020, respectively, was established as these deferred tax assets relate to state tax credit carryforwards that will likely expire prior to realization. As of December 31, 2021, the Bank had federal net operating loss carryforwards of approximately $5,317,000 and state net operating loss carryforwards of approximately $6,018,000, which will begin to expire in 2031 unless previously utilized.