Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes [Abstract]

INCOME TAXES

NOTE 18. INCOME TAXES

The following table provides information on components of income tax expense for the years ended December 31.

(Dollars in thousands)	2022		2021
Current tax expense:
Federal	$	8,814	$	3,920
State		3,332		1,614
		12,146		5,534
Deferred income tax (benefit) expense:
Federal		(911)		136
State		(271)		142
		(1,182)		278
Total income tax expense	$	10,964	$	5,812

The following table provides a reconciliation of tax computed at the statutory federal tax rate to the actual tax expense for the years ended December 31.

	2022		2021
Tax at federal statutory rate	21	%	21	%
Tax effect of:
Tax-exempt income	(1.0)		(1.6)
State income taxes, net of federal benefit	5.7		6.6
Other	0.3		1.4
Actual income tax expense rate	26.0	%	27.4	%

The following table provides information on significant components of the Company’s deferred tax assets and liabilities for the years ended December 31.

	December 31,		December 31,
(Dollars in thousands)	2022		2021
Deferred tax assets:
Allowance for credit losses	$	4,460	$	3,728
Write-downs of other real estate owned		21		12
Nonaccrual loan interest		345		253
Lease liabilities		2,635		3,021
Deferred compensation		1,522		1,246
Deferred loan costs		1,183		730
Unrealized losses on available-for-sale securities		3,399		—
Other		1,487		903
Total deferred tax assets		15,052		9,893
Less valuation allowance		(791)		(474)
Deferred tax assets, net of valuation allowance		14,261		9,419
Deferred tax liabilities:
Depreciation		2,491		1,030
Right-of-use assets		2,560		2,968
Mortgage servicing rights		1,405		1,084
Acquisition accounting adjustments		57		986
Deferred capital gain on branch sale		220		228
Unrealized gains on available-for-sale securities		—		13
Other		171		184
Total deferred tax liabilities		6,904		6,493
Net deferred tax assets	$	7,357	$	2,926