INCOME TAXES

12 Months Ended

Dec. 31, 2020

INCOME TAXES

INCOME TAXES

NOTE 9 — INCOME TAXES

Income tax expense consisted of the following for the years ended December 31, 2020 and 2019 (in thousands):

	Year Ended December 31,
(in thousands)	2020		2019
Current
Federal	$	10,936	$	9,222
State and local		7,226		6,570
Total current		18,162		15,792
Deferred
Federal		139		(845)
State and local		151		(1,020)
Total deferred		290		(1,865)
Total income tax expense	$	18,452	$	13,927

Deferred tax assets and liabilities consist of the following (in thousands):

	At December 31,
	2020		2019
Deferred tax assets:
Allowance for loan losses	$	11,145	$	8,303
Interest on nonaccrual loans		—		24
Off balance sheet reserves		57		57
Restricted stock		90		188
Tangible asset		14		17
Non-qualified stock options		292		294
Net unrealized loss on interest rate cap		564		—
Other		—		51
Total gross deferred tax assets		12,162		8,934
Deferred tax liabilities:
Depreciation and amortization		3,731		781
Net unrealized gain on securities available for sale		1,067		604
Pass-through income		59		69
Prepaid assets		355		341
Total gross deferred tax liabilities		5,212		1,795
Net deferred tax asset, included in other assets	$	6,950	$	7,139

The following is a reconciliation of the Company’s statutory federal income tax rate of 21% to its effective tax rate for the years ended December 31, 2020 and 2019 (in thousands):

	For the year ended December 31,
	2020				2019
	Tax expense/				Tax expense/
	(benefit)		Rate		(benefit)		Rate
Pretax income at statutory rates	$	12,163	21.00	%	$	9,253	21.00	%
State and local taxes, net of federal income tax benefit		5,828	10.06			4,385	9.95
Nondeductible expenses		457	0.79			430	0.97
Excess tax deduction on equity awards		(59)	(0.10)			(132)	(0.30)
Tax-exempt income, net		—	—			(2)	(0.00)
Other		63	0.11			(7)	(0.01)
Effective income tax expense/rate	$	18,452	31.86	%	$	13,927	31.61	%

Metropolitan Bank Holding Corp. and the Bank filed consolidated Federal, New York State and New York City tax returns in 2020 and 2019.

As of December 31, 2020 and 2019, there are no unrecognized tax benefits, and the Company does not expect this to significantly change in the next twelve months.

The Company and its subsidiary are subject to U.S. federal income tax as well as income tax of the State and City of New York. The Company is no longer subject to examination by the U.S. federal and state or local tax authorities for years prior to 2016.