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9. Income Taxes
 12 Months Ended
Dec. 31, 2021
9. Income Taxes  
Income Taxes

(9)

Income Taxes

 

 

 

The provision for income taxes is summarized as follows:

   

(Dollars in thousands)

 

 

 

 

 

 

 

 

 2021

 

 

 2020

 

 

 2019

 

Current expense

 

$4,079

 

 

 

3,049

 

 

 

2,972

 

Deferred income tax expense

 

 

(283)

 

 

(560)

 

 

164

 

Total income tax

 

$3,796

 

 

 

2,489

 

 

 

3,136

 

 

 

The differences between the provision for income taxes and the amount computed by applying the statutory federal income tax rate to earnings before income taxes are as follows:

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 2021

 

 

 2020

 

 

 2019

 

Tax expense at statutory rate

 

$3,975

 

 

 

2,908

 

 

 

3,613

 

State income tax, net of federal income tax effect

 

 

339

 

 

 

261

 

 

 

351

 

Tax-exempt interest income

 

 

(497)

 

 

(649)

 

 

(802)

Increase in cash surrender value of life insurance

 

 

(83)

 

 

(80)

 

 

(81)

Tax credits

 

 

(234)

 

 

(234)

 

 

-

 

Nondeductible interest and other expense

 

 

30

 

 

 

46

 

 

 

40

 

Other

 

 

266

 

 

 

237

 

 

 

15

 

Total

 

$3,796

 

 

 

2,489

 

 

 

3,136

 

   

 

The following summarizes the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities.  The net deferred tax asset is included as a component of other assets at December 31, 2021 and 2020.

 

(Dollars in thousands)

 

 

 

 

 

 

 2021

 

 

 2020

 

Deferred tax assets:

 

 

 

 

 

 

Allowance for loan losses

 

$2,149

 

 

 

2,276

 

Accrued retirement expense

 

 

1,148

 

 

 

1,190

 

Restricted stock

 

 

209

 

 

 

190

 

Interest income on nonaccrual loans

 

 

2

 

 

 

1

 

Lease liability

 

 

1,075

 

 

 

798

 

Total gross deferred tax assets

 

 

4,583

 

 

 

4,455

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Deferred loan fees

 

 

263

 

 

 

284

 

Accumulated depreciation

 

 

563

 

 

 

873

 

Prepaid expenses

 

 

4

 

 

 

5

 

ROU Asset

 

 

1,060

 

 

 

787

 

Other

 

 

(55)

 

 

41

 

Unrealized gain on available for sale securities

 

 

29

 

 

 

1,611

 

Total gross deferred tax liabilities

 

 

1,864

 

 

 

3,601

 

 

 

 

 

 

 

 

 

 

Net deferred tax asset

 

$2,719

 

 

 

854

 

 

 

The Company has analyzed the tax positions taken or expected to be taken in its tax returns and has concluded that it has no liability related to uncertain tax positions.

 

As of December 31, 2021, the Company’s Federal income tax filings for years 2018 through 2021  open to audit by the Internal Revenue Service.  The Company’s North Carolina income tax returns are currently under

  

 
A-59

 

 

 

audit for tax year 2014-2016, tax years 2018, 2019, 2020 and 2021 remain open to audit by the North Carolina Department of Revenue.