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INCOME TAXES | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | Note 14—INCOME TAXES Income tax expense for the years ended December 31, 2021, 2020 and 2019 consists of the following:
|  | Year ended December 31 |
(Dollars in thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
Current |  |  |  |  |  |  |  |  |
Federal |  | $ | 3,653 |  |  | $ | 2,724 |  |  | $ | 2,299 |
State |  |  | 749 |  |  |  | 523 |  |  |  | 541 |
|  |  | 4,402 |  |  |  | 3,247 |  |  |  | 2,840 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (167 | ) |  |  | (751 | ) |  |  | 18 |
State |  |  | (53 | ) |  |  | (34 | ) |  |  | — |
|  |  | (220 | ) |  |  | (785 | ) |  |  | 18 |
Income tax expense |  | $ | 4,182 |  |  | $ | 2,496 |  |  | $ | 2,858 |
Reconciliation from expected federal tax expense to effective income tax expense for the periods indicated are as follows:
|  | Year ended December 31 |
(Dollars in thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
Expected federal income tax expense |  | $ | 4,126 |  |  | $ | 2,645 |  |  | $ | 2,904 |
State income tax net of federal benefit |  |  | 550 |  |  |  | 386 |  |  |  | 427 |
Tax exempt interest |  |  | (396 | ) |  |  | (316 | ) |  |  | (293 | )
Increase in cash surrender value life insurance |  |  | (146 | ) |  |  | (153 | ) |  |  | (144 | )
Valuation allowance |  |  | 32 |  |  |  | 32 |  |  |  | 52 |
Life Insurance Proceeds |  |  | — |  |  |  | (65 | ) |  |  | — |
Excess tax benefit of stock compensation |  |  | (11 | ) |  |  | (1 | ) |  |  | (56 | )
Other |  |  | 27 |  |  |  | (32 | ) |  |  | (32 | )
Income tax expense |  | $ | 4,182 |  |  | $ | 2,496 |  |  | $ | 2,858 |
The following is a summary of the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities:
|  | December 31, |
(Dollars in thousands) |  | 2021 |  |  | 2020 |
Assets: |  |  |  |  |  |
Allowance for loan losses |  | $ | 2,415 |  |  | $ | 2,235 |
Excess tax basis of deductible intangible assets |  |  | 98 |  |  |  | 130 |
Excess tax basis of assets acquired |  |  | 28 |  |  |  | 57 |
Net operating loss carry forward |  |  | 792 |  |  |  | 757 |
Compensation expense deferred for tax purposes |  |  | 1,221 |  |  |  | 1,125 |
Deferred loss on other-than-temporary-impairment charges |  |  | 5 |  |  |  | 5 |
FASB 91 - Origination Income & Costs |  |  | 296 |  |  |  | 253 |
Tax credit carry-forwards |  |  | 33 |  |  |  | 33 |
Other Real Estate Owned |  |  | 230 |  |  |  | 229 |
Other |  |  | 183 |  |  |  | 163 |
Total deferred tax asset |  |  | 5,301 |  |  |  | 4,987 |
Valuation reserve |  |  | 889 |  |  |  | 857 |
Total deferred tax asset net of valuation reserve |  |  | 4,412 |  |  |  | 4,130 |
Liabilities: |  |  |  |  |  |  |  |
Tax depreciation in excess of book depreciation |  |  | 612 |  |  |  | 514 |
Excess financial reporting basis of assets acquired |  |  | 969 |  |  |  | 1,005 |
Unrealized gain on available-for-sale securities |  |  | 1,021 |  |  |  | 3,149 |
Total deferred tax liabilities |  |  | 2,602 |  |  |  | 4,668 |
Net deferred tax asset / (liability) recognized |  | $ | 1,810 |  |  | $ | (538 | )
At December 31, 2021 the Company has approximately $20.1 million in State net operating losses. A valuation allowance is established to fully offset the deferred tax asset related to these net operating losses of the holding company. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Additional amounts of these deferred tax assets considered to be realizable could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced. The net deferred asset is included in other assets on the consolidated balance sheets. A portion of the change in the net deferred tax asset relates to unrealized gains on securities available-for-sale. The tax benefit related to the change in unrealized gain on these securities of $2.1 million has been recorded directly to shareholders’ equity. The balance in the change in net deferred tax asset results from the current period deferred tax benefit of $220 thousand. At December 31, 2021, the Company had no federal net operating loss carryforward. Tax returns for 2018 and subsequent years are subject to examination by taxing authorities. As of December 31, 2021, the Company had no material unrecognized tax benefits or accrued interest and penalties. It is the Company’s policy to account for interest and penalties accrued relative to unrecognized tax benefits as a component of income tax expense.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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