Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 12. Income Taxes

Income tax expense in the consolidated statements of income for the years ended December 31, 2023, 2022, and 2021, includes the following (in thousands):

	2023		2022		2021
Current tax expense
Federal	$	5,632	$	10,412	$	8,031
State		692		2,029		855
Deferred tax expense related to:
Federal		1,100		(407)		405
State		209		(148)		238
Total income tax expense	$	7,633	$	11,886	$	9,529

The income tax expense is different from the expected tax expense computed by multiplying income before income tax expense by the statutory income tax rate of 21%. The reasons for this difference are as follows (in thousands):

	2023		2022		2021
Federal income tax expense computed at the statutory rate	$	7,607	$	11,531	$	9,307
State income taxes, net of federal tax benefit		712		1,486		863
Nondeductible acquisition expenses		—		1		94
Tax-exempt interest		(419)		(624)		(568)
Bank-owned life insurance		(413)		(389)		(393)
Tax benefit from stock options		(68)		(170)		(10)
Other		214		51		236
Total income tax expense	$	7,633	$	11,886	$	9,529

The components of the net deferred tax asset, which are included in Other Assets in the consolidated balance sheets, as of December 31, 2023 and 2022, were as follows (in thousands):

	2023		2022
Deferred tax assets:
Allowance for loan losses	$	9,075	$	6,033
Unfunded commitments		618		22
Fair value adjustments		1,584		3,366
Unrealized losses on investment securities		8,514		11,965
Unrealized losses on hedges		508		337
Other real estate owned		9		258
Deferred compensation		1,132		2,316
Lease liability		2,667		2,445
Federal net operating loss carryforward		4,024		4,335
Other		1,992		1,595
Total deferred tax assets		30,123		32,672
Deferred tax liabilities:
Accumulated depreciation		2,451		2,464
Core deposit intangible		1,774		2,362
Right of use asset		2,561		2,408
Other		1,031		845
Total deferred tax liabilities		7,817		8,079
Net deferred tax asset	$	22,306	$	24,593

At December 31, 2023, the Company has a federal net operating loss carryforward recorded of approximately $19.1 million acquired with the acquisition of SCB.  The net operating loss is subject to Section 382 limitations. The federal net operating loss will begin to expire in 2031. The income tax returns of the Company for 2022, 2021, and 2020 are subject to examination by the federal and state taxing authorities, generally for three years after they were filed.