Entity information:
(7)

Income Taxes

The components of the income taxes are as follows:

 

     Year Ended December 31,
(in thousands)        2017            2016    

Current:

      

Federal

      $ 1,309        $ 1,031  

State

      224        180  
  

 

 

 

   

 

 

 

Total current

      1,533        1,211  
  

 

 

 

   

 

 

 

Deferred:

      

Federal

      193        1  

State

      9        5  
  

 

 

 

   

 

 

 

Total deferred

      202        6  
  

 

 

 

   

 

 

 

Total income taxes

      $ 1,735        $ 1,217  
  

 

 

 

   

 

 

 

 

The reasons for the difference between the statutory Federal income tax rate of 34% and the effective tax rates are summarized as follows:

 

     Year Ended December 31,    
     2017            2016    
              % of                     % of    
              Pretax                     Pretax    
     Amount        Earnings            Amount        Earnings    
(dollars in thousands)                                        

Income taxes at statutory rate

      $ 1,548             34.0        %        $ 1,169               34.0       % 

Increase (decrease) resulting from:

                      

State taxes, net of federal tax benefit

      154             3.4               122             3.5      

Tax-exempt income

      (97)            (2.1)              (82)           (2.4)     

Stock-based compensation

      (60)            (1.3)              -               -         

Change in federal rate

      155             3.4               -               -         

Other nondeductible expenses

      35             0.7               8             0.3      
  

 

 

 

     

 

 

 

       

 

 

 

     

 

 

 

  

Total

      $       1,735                         38.1        %        $       1,217                       35.4       %
  

 

 

 

     

 

 

 

       

 

 

 

     

 

 

 

  

Tax effects of temporary differences that give rise to the deferred tax assets and liabilities are as follows:

 

     At December 31,    
     2017    2016    
(in thousands)              

Deferred tax assets:

        

Allowance for loan losses

      $ 744        $ 1,008    

Organizational and start-up costs

      49        87    

Stock-based compensation

      12        18    

Unrealized losses on securities available for sale

      100        137    

Other

      23        16    
  

 

 

 

   

 

 

 

  

Deferred tax assets

      928        1,266    
  

 

 

 

   

 

 

 

  

Deferred tax liabilities:

        

Prepaid Expenses

      (70 )       (69 )   

Deferred loan costs

      (317 )       (392 )   

Premises and equipment

      (202 )       (272 )   
  

 

 

 

   

 

 

 

  

Deferred tax liabilities

      (589 )       (733 )   
  

 

 

 

   

 

 

 

  

Net deferred tax asset

      $                 339        $                 533    
  

 

 

 

   

 

 

 

  

The Company files consolidated income tax returns in the U.S. federal jurisdiction and the State of Florida. The Company is no longer subject to U.S. federal, or state and local income tax examinations by taxing authorities for years before 2014.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was enacted. The Act, among other provisions, reduced the corporate tax rate from 35% to 21%. As a result, the Company recorded additional tax expense of $155,000 to measure the net Deferred Tax Asset at the new enacted tax rate. An election was also made to reclassify the income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive loss to retained earnings.