Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

Note 8. Income Taxes

The components of income tax expense are as follows for the years ended December 31, 2021 and 2020:

	2021		2020
(dollars in thousands)
Current income tax expense:
Federal	$	211	$	89
State		84		157
Total current tax expense		295		246
Deferred income tax expense:
Federal		198		217
State		84		28
Total deferred tax expense		282		245
Total Income tax expense	$	577	$	491

A reconciliation of income tax expense computed at the statutory rate of 21%at December 31, 2021 and December 31, 2020 to the actual income tax expense for the years ended December 31, 2021 and 2020 is as follows:

	2021		2020
(dollars in thousands)
Income tax expense at federal statutory rate	$	650	$	453
(Decrease) increase resulting from:
Tax-exempt income		(181)		(75)
Bank owned life insurance		(33)		(33)
State income taxes, net of Federal income tax benefit		133		146
Other		8		—
Total income tax expense	$	577	$	491

Deferred tax assets and liabilities resulting from the tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes at December 31, 2021 and 2020 are as follows:

	2021		2020
(dollars in thousands)
Deferred income tax benefits:
Accrued deferred compensation	$	84	$	78
Allowance for credit losses		376		143
Accumulated depreciation		(22)		(16)
Other real estate owned		—		36
Reserve for unfunded commitments		102		9
Accounting standard 310-20		(144)		(117)
Right of use asset		(132)		(171)
Lease liability		132		171
Accumulated securities premium accretion		228		214
Net unrealized depreciation on investment securities available for sale		211		(466)
Net unrealized loss on Swaps		121		261
Net deferred income tax benefits	$	956	$	142

Management has determined that no valuation allowance is required as it believes it is more likely than not that all of the deferred tax assets will be fully realizable in the future. At December 31, 2021 and 2020, management believes there are no uncertain tax positions under ASC Topic 740 Income Taxes. We file income tax returns in the US federal jurisdictions.  We are no longer subject to US federal income tax examinations by tax authorities for years before 2018.

Income tax expense was $0.58 million and $0.49 million at December 2021 and 2020, respectively.