Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

12.INCOME TAXES

The provision for income taxes consists of:

	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:

	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.