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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Taxes |
Income Taxes Text Block | NOTE 12: INCOME TAXES For the years ended December 31, 2020 and 2019 the components of income tax expense from continuing operations are presented below. Year ended December 31 (Dollars in thousands) 2020 2019 Current income tax expense: Federal $ 1,459 1,939 State 476 584 Total current income tax expense 1,935 2,523 Deferred income tax benefit: Federal (262) (136) State (68) (17) Total deferred income tax benefit (330) (153) Total income tax expense $ 1,605 2,370 Total income tax expense differs from the amounts computed by applying the statutory federal income tax rate of 21% to earnings before income taxes. A reconciliation of the differences for the years ended December 31, 2020 and 2019, is presented below. 2020 2019 Percent of Percent of pre-tax pre-tax (Dollars in thousands) Amount earnings Amount earnings Earnings before income taxes $ 9,059 12,111 Income taxes at statutory rate 1,902 21.0 % 2,543 21.0 % Tax-exempt interest (489) (5.4) (508) (4.1) State income taxes, net of federal tax effect 345 3.8 440 3.6 Bank-owned life insurance (152) (1.7) (92) (0.8) Other (1) — (13) (0.1) Total income tax expense $ 1,605 17.7 % 2,370 19.6 % The Company had a net deferred tax liability of $1.5 million and $9 thousand included in other liabilities ts on the consolidated balance sheets at December 31, 2020 and 2019, respectively. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2020 and 2019 are presented below. December 31 (Dollars in thousands) 2020 2019 Deferred tax assets: Allowance for loan losses $ 1,411 1,102 Accrued bonus 183 296 Right of use liability 204 198 Other 91 88 Total deferred tax assets 1,889 1,684 Deferred tax liabilities: Premises and equipment 199 315 Unrealized gain on securities 2,548 690 Originated mortgage servicing rights 334 326 Right of use asset 198 197 Other 147 165 Total deferred tax liabilities 3,426 1,693 Net deferred tax liability $ (1,537) (9) A valuation allowance is recognized for a deferred tax asset if, based on the weight of available evidence, it is more-likely- than-not that some portion of the entire deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projection for future taxable income over the periods which the temporary differences resulting in the remaining deferred tax assets are deductible, management believes it is more-likely -than-not that the Company will realize the benefits of these deductible differences at December 31, 2020. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income are reduced. The change in the net deferred tax asset for the years ended December 31, 2020 and 2019, is presented Year ended December 31 (Dollars in thousands) 2020 2019 Net deferred tax (liability) asset: Balance, beginning of year $ (9) 1,790 Deferred tax benefit (expense) related to continuing operations 330 153 Stockholders' equity, for accumulated other comprehensive (income) loss (1,858) (1,952) Balance, end of year $ (1,537) (9) ASC 740, Income Taxes, defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authority. This section also provides guidance on the de- recognition, measurement, and classification of income tax uncertainties in interim periods. As of December 31, 2020, the Company had no unrecognized tax benefits related to federal or state income tax matters. The Company does not anticipate any material increase or decrease in unrecognized tax benefits during 2021 relative to any tax positions taken prior to December 31, 2020. As of December 31, 2020, the Company has accrued no interest and no penalties related to uncertain tax positions. It is the Company’s policy to recognize interest and penalties related to income tax matters in income tax expense. The Company and its subsidiaries file consolidated U.S. federal and State of Alabama income tax returns. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and the State of Alabama for the years ended December 31, 2017 through 2020.

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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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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