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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]

Note 10. Income Taxes

 

The provision (benefit) for income taxes consists of the following:

 

(In thousands)

  

2021

    

2020

  

Current:

                

Federal

   $ 4,860     $ 3,248  

State

     159       30  

Total current

     5,019       3,278  

Deferred federal

     (216

)

     (281

)

Income tax expense

   $ 4,803     $ 2,997  

 

The effective tax rate differs from the U. S. statutory tax rate due to the following for 2021 and 2020:

 

   

2021

    

2020

  

U.S. statutory rate

     21.0

%

     21.0

%

Non-deductible stock compensation and various other

     1.0       0.5  

Effective tax rate

     22.0

%

     21.5

%

 

A reconciliation between reported income tax expense and the amounts computed by applying the U.S. federal statutory income tax rate of 21% to income before income taxes is presented in the following table.

 

(In thousands)

  

2021

    

2020

  

Income tax expense computed at the statutory rate

   $ 4,552     $ 2,917  

State income tax

     159       30  

Other

     92       50  

Income tax expense, as reported

   $ 4,803     $ 2,997  

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2021 and 2020 are as follows:

 

(In thousands)

  

2021

    

2020

  

Deferred tax assets:

                

Allowance for loan losses

   $ 872     $ 618  

Non-accrual loan interest

     232       70  

Servicing asset valuation allowance

     13       13  

Accrued liabilities

     193       68  

Stock compensation

     102       73  

Paycheck protection program deferred loan fees

     37       343  

Available for sale securities discount accretion

     5       10  

Net unrealized loss on securities available for sale

     87       -  

Total deferred tax assets

     1,541       1,195  

Deferred tax liabilities:

                

Net deferred loan costs

     (471

)

     (371

)

Depreciation and amortization

     (233

)

     (314

)

Held-to-maturity securities premium

     (45

)

     (57

)

Loan discount

     (125

)

     (93

)

Intangible assets

     (262

)

     (258

)

Net unrealized gain on securities available for sale

     -       (19

)

Total deferred tax liabilities

     (1,136

)

     (1,112

)

Net deferred tax asset

   $ 405     $ 83  

 

Projections for continued levels of profitability will be reviewed quarterly and any necessary adjustments to the deferred tax assets will be recognized in the provision or benefit for income taxes. In assessing the realization rate of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. No valuation allowance for deferred tax assets was recorded at December 31, 2021 and 2020, as management believes it is more likely than not that all of the deferred tax assets will be realized against deferred tax liabilities and projected future taxable income.