2021 Annual Report

The following table presents the components of the net deferred tax asset included in other assets, as of December 31, 2021 and 2020: 2020 Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (274) $ (986) Allowance for Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,332 9,848 Unrealized Gain on Securities Available for Sale . . . . . . . . . . . . . . . . . . (1,914) (2,426) Unrealized (Gain) Loss on Cash Flow Hedges . . . . . . . . . . . . . . . . . . . . . (480) 677 Prepaid Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (392) (522) Deferred Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 871 711 Deferred Loan Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,653 806 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 (95) Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,890 $ 8,013 Note 14: Tax Credit Investments The Company invests in qualified affordable housing projects and federal historic projects for the purpose of community reinvestment and obtaining tax credits. The Company’s tax credit investments are limited to existing lending relationships with well-known developers and projects within the Company’s market area. The following table presents a summary of the Company’s investments in qualified affordable housing projects and other tax credit investments at December 31, 2021 and 2020: (1) All commitments are expected to be paid by the Company by December 31, 2022. The following table presents a summary of the amortization expense and tax benefit recognized for the Company’s qualified affordable housing projects and other tax credit investments during 2021, 2020 and 2019. Amortization Tax Benefit (dollars in thousands) Expense (1) Recognized (2) Year Ended December 31, 2021 LIHTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 280 $ (330) FHTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562 (625) Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 842 $ (955) Year Ended December 31, 2020 LIHTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 281 $ (330) FHTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 738 (1,056) Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,019 $ (1,386) Year Ended December 31, 2019 LIHTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 289 $ (330) FHTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,225 (3,687) Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,514 $ (4,017) (1) The amortization expense for the LIHTC investments are included in income tax expense. The amortization for the FHTC tax credits are included in noninterest expense. (2) All of the tax benefits recognized are included in income tax expense. The tax benefit recognized for the FHTC investments primarily reflects the tax credits generated from the investments, and excludes the net tax expense/benefit of the investments’ income/loss. (dollars in thousands) 2021 (dollars in thousands) December 31, 2021 December 31, 2020 Investment Accounting Method Investment Unfunded Commitment (1) Investment Unfunded Commitment Low Income Housing Tax Credit (LIHTC) . . . . . . . . . . . . . . . . . . . . . . . . Proportional Amortization $ 2,871 $ — $ 1,867 $ — Federal Historic Tax Credit (FHTC) . . . . Equity Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,732 407 2,198 1,858 1,858 $ 4,603 $ 407 $ 4,065 $

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