Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes

Note 8. Income Taxes

The components of income tax expense are as follows for the years ended December 31, 2024 and 2023:

	2024		2023
(dollars in thousands)
Current income tax expense:
Federal	$	—	$	128
State		(110)		28
Total current tax expense		(110)		156
Deferred income tax expense:
Federal		(320)		(59)
State		(95)		(25)
Total deferred tax expense		(415)		(84)
Total Income tax expense	$	(525)	$	72

A reconciliation of income tax expense computed at the statutory rate of 21% at December 31, 2024 and December 31, 2023 to the actual income tax expense for the years ended December 31, 2024 and 2023 is as follows:

	2024		2023
(dollars in thousands)
Income tax expense at federal statutory rate	$	(134)	$	315
(Decrease) increase resulting from:
Tax-exempt income		(192)		(212)
Bank owned life insurance		(37)		(34)
State income taxes, net of Federal income tax benefit		(162)		3
Total income tax expense	$	(525)	$	72

Deferred tax assets and liabilities resulting from the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes at December 31, 2024 and 2023 are as follows:

	2024		2023
(dollars in thousands)
Deferred income tax benefits:
Accrued deferred compensation	$	91	$	89
Allowance for credit losses		676		480
Accumulated depreciation		(18)		(12)
Accrued Liabilities		75		110
Reserve for unfunded commitments		161		130
Accounting standard 310-20		(174)		(151)
Right of use asset		(13)		(58)
Lease liability		13		58
Accumulated securities discount accretion		283		272
Net operating loss carryforward		239		—
Net unrealized depreciation on investment securities available for sale		7,215		6,979
Net deferred income tax benefits	$	8,548	$	7,897

Management has determined that no valuation allowance is required as it believes it is more likely than not that all of the deferred tax assets will be fully realizable in the future. At December 31, 2024 and 2023, management believes there are no uncertain tax positions under ASC Topic 740 Income Taxes. We file income tax returns in the US federal jurisdictions.  We are no longer subject to state or US federal income tax examinations by tax authorities for years ended before 2021.

Income tax (benefit) / expense was $ (0.52) million and $0.07 million at December 2024 and 2023, respectively.