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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The reported income tax expense and effective tax rate in the Consolidated Statements of Income differ from the amounts computed by applying the statutory federal corporate income tax rate as follows for the years ended December 31:
(Dollars in thousands)202220212020
AmountRateAmountRateAmountRate
Income tax computed at statutory federal corporate income tax rate$27,015 21.0 %$11,954 21.0 %$8,956 21.0 %
Differences in rate resulting from:
State taxes, net of federal benefit2,277 1.8 %119 0.2 %62 0.1 %
Investment securities impairment431 0.3 %— — %— — %
Nondeductible acquisition costs42 — %269 0.5 %— — %
Common share awards12 — %74 0.1 %(5)— %
Bank owned life insurance(551)(0.4)%(371)(0.6)%(415)(1.0)%
Investments in tax credit funds(629)(0.5)%(381)(0.7)%(415)(1.0)%
Captive insurance benefit(421)(0.3)%(435)(0.8)%(412)(1.0)%
Tax-exempt interest income(921)(0.7)%(835)(1.5)%(668)(1.6)%
Fixed asset depreciation— — %(1,142)(2.0)%— — %
Other, net 94 0.1 %163 0.3 %776 2.0 %
Income tax expense$27,349 21.3 %$9,415 16.5 %$7,879 18.5 %
Peoples' reported income tax expense consisted of the following for the years ended December 31:
(Dollars in thousands)202220212020
Current income tax expense$8,783 $6,541 $15,980 
Deferred income tax expense (benefit)18,566 2,874 (8,101)
Income tax expense$27,349 $9,415 $7,879 
The significant components of Peoples' deferred tax assets and deferred tax liabilities consisted of the following at December 31:
(Dollars in thousands)20222021
Deferred tax assets:  
Available-for-sale securities$39,425 $1,905 
Allowance for credit losses12,827 13,575 
Nonaccrual loan interest income4,366 3,898 
Accrued employee benefits3,391 2,161 
Lease obligation1,757 1,960 
Net operating loss carryforward158 223 
Tax credit investments— 1,096 
Derivative instruments— 1,088 
Other899 561 
Gross deferred tax assets$62,823 $26,467 
Valuation allowance$158 $158 
Total deferred tax assets$62,665 $26,309 
Deferred tax liabilities:  
Equipment leases$16,316 $— 
Deferred loan income5,512 5,249 
Purchase accounting adjustments4,431 3,166 
Bank premises and equipment3,206 3,838 
Lease right-of-use assets1,588 1,788 
Derivative instruments1,302 — 
Other2,259 662 
Total deferred tax liabilities$34,614 $14,703 
Net deferred tax asset$28,051 $11,606 
At December 31, 2022, Peoples had $2.2 million of state net operating loss carryforwards which are unlikely to be utilized, resulting in a valuation allowance against the net tax benefit of approximately $158,000.
The federal income tax benefit from sales of investment securities was $14,000 in 2022, $192,000 in 2021, and $77,000 in 2020.
Income tax benefits are recognized in the Consolidated Financial Statements for a tax position only if it is considered "more-likely-than-not" of being sustained in an audit, based solely on the technical merits of the income tax position. If the recognition criteria are met, the amount of income tax benefits to be recognized are measured based on the largest income tax benefit that is more than 50 percent likely to be realized on ultimate resolution of the tax position. The following table provides a reconciliation of uncertain tax positions at December 31:
(Dollars in thousands)20222021
Uncertain tax positions, beginning of year$106 $149 
Gross increase based on tax positions related to current year39 — 
Gross decrease due to the statute of limitations(56)(43)
Uncertain tax positions, end of year$89 $106 
Peoples is subject to U.S. federal income tax, as well as to tax in various state income tax jurisdictions. Peoples' income tax returns are subject to review and examination by federal and state taxing authorities. Peoples is currently open to audit under the applicable statutes of limitations by the Internal Revenue Service for the years ended December 31, 2019 through 2021. The years open to examination by state taxing authorities vary by jurisdiction.