Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Taxes [Abstract]

Income Tax Expense (Benefit)

Income tax expense (benefit) was as follows:

	2022		2021
	(In thousands)
Current
Federal	$	700	$	4
State		218		(38	)
Deferred
Federal		944		(909	)
State		551		(363	)
Change in Valuation Allowance		–		369
Total	$	2,413	$	(937	)

Effective Income Tax Rate Reconciliation

Effective tax rates differ from the federal statutory rate of 21% applied to income before income taxes due to the following:

	2022			2021
	(In thousands)
Federal statutory rate times financial statement net gain (loss)	$	1,705		$	(1,026	)
Effect of:
State taxes, net of federal benefit		623			(292	)
Earnings from bank owned life insurance		(9	)		(9	)
Merger-related expense		–			195
Low-income housing credits		(6	)		(58	)
Change in valuation allowance		–			369
Tax effect of stock-based compensation		25			(129	)
Other, net		75			13
Total	$	2,413		$	(937	)

Deferred Tax Assets and Liabilities

Year‑end deferred tax assets and liabilities were due to the following:

	2022			2021
	(In thousands)
Deferred tax assets:
Allowance for loan losses	$	1,063		$	677
Accrued liabilities		555			954
State income taxes		45			1
Stock compensation		226			154
Net operating loss carryforward		2,616			3,946
Non‑accrual loan interest		–			51
Partnership investment		257			155
General business credit		1,962			2,006
Alternative minimum tax credit		5			5
Net unrealized loss on securities available-for-sale		7,388			464
Right of use liability		266			319
Fair value adjustment on acquired loans		291			521
Other		332			363
Total deferred tax assets		15,006			9,616
Less: valuation allowance		(369	)		(369	)
Total deferred tax assets, net of valuation allowance		14,637			9,247
Deferred tax liabilities:
Section 481 adjustments to bad debts		(7	)		(6	)
Deferred loan fees/costs		(776	)		(750	)
Basis difference on fixed assets		(723	)		(702	)
FHLB stock dividends		(90	)		(98	)
Nonaccrual loan interest		(8	)		–
Prepaid expenses		(186	)		(220	)
Right of use assets		(256	)		(317	)
Core deposit intangibles		(719	)		(1,053	)
Total deferred tax liabilities		(2,765	)		(3,146	)
Net deferred tax assets	$	11,872		$	6,101