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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Taxes  
Income Taxes

(9) Income Taxes

 

The provision for income taxes is summarized as follows:

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 2022

 

 

 2021

 

 

 2020

 

Current expense

 

$4,713

 

 

 

4,023

 

 

 

3,049

 

Deferred income tax benefit

 

 

(541)

 

 

(227)

 

 

(560)

Total income tax

 

$4,172

 

 

 

3,796

 

 

 

2,489

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

 2022

 

 

 2021

 

 

 2020

 

Tax expense at statutory rate

 

$4,262

 

 

 

3,975

 

 

 

2,908

 

State income tax, net of federal income tax effect

 

 

395

 

 

 

339

 

 

 

261

 

Tax-exempt interest income

 

 

(445)

 

 

(497)

 

 

(649)

Increase in cash surrender value of life insurance

 

 

(71)

 

 

(83)

 

 

(80)

Tax credits

 

 

(230)

 

 

(234)

 

 

(234)

Nondeductible interest and other expense

 

 

24

 

 

 

30

 

 

 

46

 

Other

 

 

237

 

 

 

266

 

 

 

237

 

Total

 

$4,172

 

 

 

3,796

 

 

 

2,489

 

 

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, 2022 and 2021.

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 2022

 

 

 2021

 

Deferred tax assets:

 

 

 

 

 

 

Allowance for loan losses

 

$2,411

 

 

 

2,149

 

Accrued retirement expense

 

 

1,174

 

 

 

1,148

 

Restricted stock

 

 

245

 

 

 

209

 

Interest income on nonaccrual loans

 

 

1

 

 

 

2

 

Lease liability

 

 

1,191

 

 

 

1,075

 

Unrealized loss on available for sale securities

 

 

14,197

 

 

 

-

 

Total gross deferred tax assets

 

 

19,219

 

 

 

4,583

 

 

 

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

 

 

Deferred loan fees

 

 

209

 

 

 

263

 

Accumulated depreciation

 

 

438

 

 

 

563

 

Prepaid expenses

 

 

3

 

 

 

4

 

ROU Asset

 

 

1,175

 

 

 

1,060

 

Other

 

 

(93)

 

 

(55)

Unrealized gain on available for sale securities

 

 

-

 

 

 

29

 

Total gross deferred tax liabilities

 

 

1,732

 

 

 

1,864

 

 

 

 

 

 

 

 

 

 

Net deferred tax asset

 

$17,487

 

 

 

2,719

 

 

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, 2022, the Company’s Federal income tax filings for years 2019 through 2021 are open to audit by the Internal Revenue Service.  The Company’s North Carolina income tax returns are currently under audit for tax year 2014-2016, tax years 2019, 2020, 2021 and 2022 remain open to audit by the North Carolina Department of Revenue.