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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

(9) Income Taxes

 

Income taxes consisted of the following (in thousands):

 

   2023   2022 
   Year Ended December 31, 
   2023   2022 
Current:        
Federal  $1,040   $— 
State   313    — 
           
Total Current   1,353    — 
           
Deferred:          
Federal   654    1,071 
State   167    298 
           
Total Deferred Income taxes   821    1,369 
           
Total Income taxes  $2,174   $1,369 

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Consolidated Financial Statements

 

(9) Income Taxes Continued

 

The reasons for the differences between the statutory Federal income tax rate and the effective tax rate are summarized as follows (dollars in thousands):

 

   Year Ended December 31, 
   2023   2022 
       % of       % of 
   Amount   Pretax Income   Amount   Pretax Income 
                 
Income taxes at statutory rate  $1,776    21.0%  $1,132    21.0%
Increase resulting from:                    
State taxes, net of Federal tax benefit   379    4.5%   235    4.4%
Other permanent differences   19    0.2%   2    — 
                     
   $2,174    25.7%  $1,369    25.4%

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (in thousands):

 

   2023   2022 
   At December 31, 
   2023   2022 
Deferred tax assets:          
Net operating loss carryforwards  $41   $1,322 
Allowance for credit losses   1,519    893 
Premises and equipment   14    55 
Nonaccrual loan interest   22    26 
Accrued expense   114    72 
Operating lease liabilities   574    550 
Unrealized loss on debt securities   1,804    1,978 
Other   1    — 
           
Total deferred tax assets   4,089    4,896 
           
Deferred tax liabilities:          
Right of use lease assets   (552)   (537)
Loan costs   (634)   (523)
Total deferred tax liabilities   (1,186)   (1,060)
Net deferred tax asset  $2,903   $3,836 

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Consolidated Financial Statements

 

(9) Income Taxes, Continued

 

At December 31, 2023, the Company had net operating loss carryforwards of approximately $0.2 million for Federal and Florida tax purposes available to offset future taxable income. These carryforwards will begin to expire in 2029. A portion of the Federal and Florida net operating losses are subject to Internal Revenue Code (“IRC”) Section 382 limitations.

 

The Company files U.S., Florida, and Illinois income tax returns. The Company is no longer subject to U.S. Federal or state income tax examinations by taxing authorities for years before 2020.

 

The Company regularly reviews its tax positions in each significant taxing jurisdiction in the process of evaluating its unrecognized tax benefits. The Company makes adjustments to its unrecognized tax benefits when: (i) facts and circumstances regarding a tax position change, causing a change in management’s judgment regarding that tax position; (ii) a tax position is effectively settled with a tax authority at a differing amount; and/or (iii) the statute of limitations expires regarding a tax position. The Company does not expect a change in unrecognized tax benefits in the next 12 months.