Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

10. INCOME TAXES

The consolidated provisions for income taxes for the years ended December 31, 2020 and 2019 were as follows:

	2020		2019
	(Dollars in Thousands)
Federal
Current	$	29	$	(54	)
Deferred		626		1,100
Total federal		655		1,046
State
Current		76		166
Deferred		94		34
Total state		170		200
Total	$	825	$	1,246

The consolidated tax expense differed from the amount computed by applying the Company’s federal statutory income tax rate of 21.0% in 2020 and 2019 as described in the following table:

	2020			2019
	(Dollars in Thousands)
Income tax expense at federal statutory rate	$	742		$	1,220
Increase (decrease) resulting from:
Tax-exempt interest		(87	)		(95	)
Bank-owned life insurance		(63	)		(65	)
State income tax expense, net of federal income taxes		132			229
Other		101			(43	)
Total	$	825		$	1,246

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2020 and 2019 are presented below:

	2020		2019
	(Dollars in Thousands)
Deferred tax assets:
Allowance for loan losses	$	1,749	$	1,354
Deferred compensation		973		1,040
Deferred commissions and fees		260		337
Impairment of other real estate owned		9		52
Federal net operating loss carryforwards		—		655
State net operating loss carryforwards		192		270
Federal alternative minimum tax and general business    credits carryforwards		42		107
Unrealized loss on securities available-for-sale		—		71
Unrealized loss on cash flow hedges		443		1
Other		658		630
Total gross deferred tax assets		4,326		4,517
Deferred tax liabilities:
Premises and equipment		1,311		1,205
Core deposit intangible		245		347
Limited partnerships		138		135
Unrealized gain on securities available-for-sale		426		—
Other		231		79
Total gross deferred tax liabilities		2,351		1,766
Net deferred tax asset, included in other assets	$	1,975	$	2,751

The Company did not have any federal net operating loss carryforwards as of December 31, 2020 and had federal net operating loss carryforwards of $3.1 million as of December 31, 2019. The Company had state net operating loss carryforwards of $3.7 million and $5.9 million for the same respective periods. In addition, as of December 31, 2020 and 2019, the Company had federal tax credit carryforwards of $42 thousand and $0.1 million, respectively. The federal and state net operating loss and federal tax credit carryforwards can be used to offset income in future periods and reduce income taxes payable in those future periods.

The Company files a consolidated income tax return with the federal government and the States of Alabama and Tennessee. ALC files several state income tax returns, with the majority of its non-Alabama income being apportioned to Mississippi. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and the states in which it filed for the years ended December 31, 2014 through 2020.

As of December 31, 2020, the Company had no unrecognized tax benefits related to federal or state income tax matters and does not anticipate any material increase or decrease in unrecognized tax benefits relative to any tax positions taken prior to December 31, 2020. As of December 31, 2020, the Company had accrued no interest and no penalties related to uncertain tax positions.