Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes [Abstract]

Income Taxes

13) Income Taxes

The provision for income taxes for the year ended December 31, 2021, 2020 and 2019 consists of the following:

	Years ended December 31,
	2021		2020			2019
	(In Thousands)
Current:
Federal	$	17,387	$	22,272		$	8,377
State		2,550		7,319			2,655
		19,937		29,591			11,032
Deferred:
Federal		900		(2,171	)		619
State		478		(449	)		20
		1,378		(2,620	)		639
Total	$	21,315	$	26,971		$	11,671

The income tax provisions differ from that computed at the Federal statutory corporate tax rate for the years ended December 31, 2021, 2020 and 2019 as follows:

	Years ended December 31,
	2021			2020			2019
	(Dollars In Thousands)
Income before income taxes	$	92,106		$	108,116		$	47,574
Tax at Federal statutory rate (21% in 2021, 2020, and 2019)		19,342			22,704			9,991
Add (deduct) effect of:
State income taxes net of Federal income tax benefit		2,392			5,428			2,113
Cash surrender value of life insurance		(339	)		(400	)		(406	)
Non-deductible ESOP and stock option expense		216			133			186
Tax-exempt interest income		(208	)		(222	)		(236	)
Non-deductible compensation		103			96			216
Death benefit on bank owned life insurance		-			(306	)		-
Stock compensation		(251	)		(387	)		(312	)
Other		60			(75	)		119
Income tax provision	$	21,315			26,971			11,671
Effective tax rate		23.1	%		24.9	%		24.5	%

The significant components of the Company’s net deferred tax assets (liabilities) included in prepaid expenses and other assets are as follows at December 31, 2021 and 2020:

	December 31,
	2021			2020
Gross deferred tax assets:	(In Thousands)
Depreciation	$	886			832
Restricted stock and stock options		307			312
Allowance for loan losses		3,805			4,682
Repurchase reserve for loans sold		540			765
Non-accrual interest		185			208
Real estate owned		8			166
Litigation		-			1,206
Unrealized loss on impaired securities		23			23
Lease liability		1,498			1,855
Unrealized loss on securities available for sale, net		236			-
Other		109			49
Total gross deferred tax assets		7,597			10,098
Gross deferred tax liabilities:
Unrealized gain on securities available for sale, net		-			(1,059	)
Mortgage servicing rights		(390	)		(1,558	)
FHLB stock dividends		(46	)		(52	)
Lease asset		(1,469	)		(1,726	)
Deferred loan fees		(372	)		(300	)
Deferred liabilities		(2,277	)		(4,695	)
Net deferred tax assets	$	5,320		$	5,403

The Company had a Wisconsin net operating loss carry forward of $19,000 at December 31, 2021 which will begin to expire in 2028. The Company has no capital loss carryforwards as of December 31, 2021.

Under the Internal Revenue Code and Wisconsin Statutes, the Company was permitted to deduct, for tax years beginning before 1988, an annual addition to a reserve for bad debts. This amount differs from the provision for loan losses recorded for financial accounting purposes. Under prior law, bad debt deductions for income tax purposes were included in taxable income of later years only if the bad debt reserves were used for purposes other than to absorb bad debt losses. Because the Company did not intend to use the reserve for purposes other than to absorb losses, no deferred income taxes were provided. Retained earnings at December 31, 2021 include approximately $16.7 million for which no deferred Federal or state income taxes were provided.  Deferred income taxes have been provided on certain additions to the tax reserve for bad debts.

The Company and its subsidiaries file consolidated federal and combined state tax returns. One subsidiary also files separate state income tax returns in certain states.  The Company is no longer subject to state income tax examinations by certain state tax authorities for years before 2017 or subject to federal tax examinations for the years before 2018.