Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.0.1
Income Taxes
12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

NOTE 17. INCOME TAXES

The components of the expense (benefit) for income taxes for the periods presented are as follows:

 

 

 

For the Years Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

 

 

(Dollars in thousands)

 

Current income tax expense:

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

$

9,282

 

 

$

8,761

 

 

$

3,616

 

State

 

 

167

 

 

 

226

 

 

 

75

 

Total current income tax expense

 

 

9,449

 

 

 

8,987

 

 

 

3,691

 

Deferred income tax expense (benefit):

 

 

 

 

 

 

 

 

 

 

 

 

Federal

 

 

1,224

 

 

 

(1,528

)

 

 

1,730

 

State

 

 

 

 

 

 

 

 

 

Total deferred income tax expense (benefit)

 

 

1,224

 

 

 

(1,528

)

 

 

1,730

 

Total income tax expense (benefit)

 

$

10,673

 

 

$

7,459

 

 

$

5,421

 

 

 

A reconciliation of the expected income tax expense at the statutory federal income tax rate of 21% for the years ended December 31, 2021, 2020 and 2019 to the Company’s actual income tax expense and effective tax rate for the periods presented is as follows:

 

 

 

For the Years Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

 

 

Amount

 

 

%

 

 

Amount

 

 

%

 

 

Amount

 

 

%

 

 

 

(Dollars in thousands)

 

Tax expense at federal income tax rate

 

$

11,120

 

 

 

21.00

%

 

$

8,143

 

 

 

21.00

%

 

$

5,576

 

 

 

21.00

%

State taxes

 

 

140

 

 

 

0.26

%

 

 

206

 

 

 

0.53

%

 

 

62

 

 

 

0.23

%

Increase (decrease) resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax-exempt interest

 

 

(465

)

 

 

-0.88

%

 

 

(373

)

 

 

-0.96

%

 

 

(447

)

 

 

-1.68

%

Bank-owned life insurance

 

 

(141

)

 

 

-0.26

%

 

 

(75

)

 

 

-0.19

%

 

 

(64

)

 

 

-0.24

%

Stock compensation

 

 

(73

)

 

 

-0.14

%

 

 

80

 

 

 

0.21

%

 

 

87

 

 

 

0.33

%

Interest expense exclusion

 

 

10

 

 

 

0.02

%

 

 

19

 

 

 

0.05

%

 

 

26

 

 

 

0.10

%

Meals and entertainment

 

 

24

 

 

 

0.04

%

 

 

31

 

 

 

0.08

%

 

 

29

 

 

 

0.11

%

Club dues

 

 

34

 

 

 

0.07

%

 

 

40

 

 

 

0.10

%

 

 

38

 

 

 

0.14

%

Acquisition expenses

 

 

51

 

 

 

0.10

%

 

 

 

 

 

0.00

%

 

 

156

 

 

 

0.59

%

NOL carryback claim

 

 

 

 

 

0.00

%

 

 

(575

)

 

 

-1.48

%

 

 

 

 

 

0.00

%

Other

 

 

(27

)

 

 

-0.05

%

 

 

(37

)

 

 

-0.10

%

 

 

(42

)

 

 

-0.17

%

Total

 

$

10,673

 

 

 

20.16

%

 

$

7,459

 

 

 

19.24

%

 

$

5,421

 

 

 

20.41

%

 

During the years ended December 31, 2021, 2020, and 2019 no changes were made to the corporate tax rate.      

Deferred income tax assets and liabilities reflect the tax effect of estimated temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for the same items for income tax reporting purposes.

The significant components of the net deferred tax assets and liabilities for the periods presented are as follows:

 

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in thousands)

 

Deferred tax assets:

 

 

 

 

 

 

 

 

Allowance for loan losses

 

 

3,392

 

 

 

3,271

 

Unrealized loss on securities available-for-sale

 

 

1,406

 

 

 

 

Lease liability

 

 

991

 

 

 

 

Organizational costs

 

 

29

 

 

 

41

 

Purchase accounting

 

 

568

 

 

 

1,416

 

Net operating loss

 

 

 

 

 

39

 

Stock option expense

 

 

528

 

 

 

445

 

Other

 

 

87

 

 

 

69

 

Total gross deferred tax assets

 

 

7,001

 

 

 

5,281

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Right of use asset

 

 

(953

)

 

 

 

Unrealized gain on securities available-for-sale

 

 

 

 

 

(259

)

Depreciation and amortization

 

 

(3,168

)

 

 

(2,200

)

Purchase accounting

 

 

(1,087

)

 

 

(1,538

)

Unrealized gain on cash flow hedge

 

 

(363

)

 

 

 

SBA servicing

 

 

(145

)

 

 

(92

)

FHLB dividends

 

 

(113

)

 

 

(107

)

Total gross deferred tax liabilities

 

 

(5,829

)

 

 

(4,196

)

Deferred tax assets (liabilities), net

 

$

1,172

 

 

$

1,085

 

 

The ability to realize deferred tax assets is dependent upon various factors, including the generation of future taxable income, the existence of taxes paid and recoverable, the reversal of deferred tax liabilities and tax planning strategies. Based upon these factors, management believes it is more likely than not that the Company will realize the benefits of these deferred tax assets.

 During the year ended December 31, 2020, the Company decided to carry back certain net operating losses as allowed by the CARES Act, which was enacted on March 27, 2020.  This resulted in recording a discrete income tax benefit in the amount of $575 thousand.

The Company did not have any uncertain tax positions at December 31, 2021. The Company did not record interest and penalties for the year ended December, 31, 2021 and 2020.  The Company recorded interest and penalties of $23 thousand for the year ended December 31, 2019.