| Income Taxes |
The provision for income taxes consists of:
|
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|
|
|
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|
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|
For the Year Ended December 31, |
|
(In Thousands) |
|
2023 |
|
|
2022 |
|
Current tax expense |
|
|
|
|
|
|
Federal |
|
$ |
81 |
|
|
$ |
38 |
|
State |
|
|
4 |
|
|
|
— |
|
Total Current tax expense |
|
$ |
85 |
|
|
$ |
38 |
|
Deferred tax (benefit) expense |
|
|
|
|
|
|
Federal |
|
$ |
(3,187 |
) |
|
$ |
1,184 |
|
State |
|
|
(259 |
) |
|
|
— |
|
Total Deferred tax (benefit) expense |
|
|
(3,446 |
) |
|
|
1,184 |
|
Total tax (benefit) expense |
|
$ |
(3,361 |
) |
|
$ |
1,222 |
|
The tax effects of deductible and taxable temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities, respectively, are as follows:
|
|
|
|
|
|
|
|
|
(In Thousands) |
|
December 31,
2023 |
|
|
December 31,
2022 |
|
Deferred tax assets: |
|
|
|
|
|
|
Allowance for loan losses |
|
$ |
6,009 |
|
|
$ |
970 |
|
Deferred compensation |
|
|
757 |
|
|
|
602 |
|
Net fair value adjustment on acquired net assets |
|
|
10,355 |
|
|
|
1,250 |
|
Net unrealized loss on debt securities |
|
|
1,025 |
|
|
|
1,703 |
|
Net operating loss carryforwards |
|
|
6,877 |
|
|
|
1,740 |
|
Lease liability |
|
|
3,811 |
|
|
|
1,875 |
|
Other |
|
|
1,175 |
|
|
|
379 |
|
Total deferred tax assets |
|
$ |
30,009 |
|
|
$ |
8,519 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
Premises and equipment |
|
$ |
(1,867 |
) |
|
$ |
(1,025 |
) |
Net unrealized gain on cash flow hedge |
|
|
(150 |
) |
|
|
— |
|
Right of use asset |
|
|
(3,611 |
) |
|
|
(1,875 |
) |
Other |
|
|
(228 |
) |
|
|
— |
|
Total deferred tax liabilities |
|
|
(5,856 |
) |
|
|
(2,900 |
) |
Net deferred tax asset |
|
$ |
24,153 |
|
|
$ |
5,619 |
|
The Company also has a $33,667 net operating loss carryforward at December 31, 2023 of which $701 will begin to expire in 2029. The remaining $32,966 of net operating loss carryforward does not expire. The Company had no valuation allowance against its deferred tax assets in view of the Company's ability to realize the net deferred tax assets against future anticipated taxable income. The reconciliation of the federal statutory rate and the Company's effective income tax rate is as follows:
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|
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|
For the Year Ended December 31, |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
(In Thousands) |
|
Amount |
|
|
% of Pretax Income |
|
|
|
Amount |
|
|
% of Pretax Income |
|
|
Provision at statutory rate |
|
$ |
(3,219 |
) |
|
|
21.0 |
|
% |
|
$ |
1,432 |
|
|
|
21.0 |
|
% |
Tax-exempt income, net of TEFRA disallowance |
|
|
(162 |
) |
|
|
1.1 |
|
|
|
|
(253 |
) |
|
|
(3.7 |
) |
|
State income taxes, net of federal income taxes |
|
|
(202 |
) |
|
|
1.3 |
|
|
|
|
— |
|
|
|
— |
|
|
Bank-owned life insurance |
|
|
(155 |
) |
|
|
1.0 |
|
|
|
|
(104 |
) |
|
|
(1.5 |
) |
|
Non-deductible merger expenses |
|
|
387 |
|
|
|
(2.5 |
) |
|
|
|
— |
|
|
|
— |
|
|
Revaluation of deferred taxes for state tax rates |
|
|
(177 |
) |
|
|
1.1 |
|
|
|
|
— |
|
|
|
— |
|
|
Other |
|
|
167 |
|
|
|
(1.1 |
) |
|
|
|
147 |
|
|
|
2.1 |
|
|
Actual tax expense and effective rate |
|
$ |
(3,361 |
) |
|
|
21.9 |
|
% |
|
$ |
1,222 |
|
|
|
17.9 |
|
% |
The Company recognized no adjustment for uncertain tax positions or unrecognized income tax benefits for the years ended December 31, 2023 and 2022. The Company's policy is to recognize interest and penalties on unrecognized tax benefits in the provision for income tax expense in the consolidated statements of operation. The Company did not recognize any interest and penalties for the years ended December 31, 2023 and 2022. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations by tax authorities for years before 2020.
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