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Income Taxes
 12 Months Ended
Dec. 31, 2023
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:
202320222021
(Dollars in thousands)AmountRateAmountRateAmountRate
Income tax computed at statutory federal corporate income tax rate$30,476 21.0 %$27,015 21.0 %$11,954 21.0 %
Differences in rate resulting from:
State taxes, net of federal benefit3,053 2.1 %2,277 1.8 %119 0.2 %
Investment securities impairment— — %431 0.3 %— — %
Nondeductible acquisition costs168 0.1 %42 — %269 0.5 %
Common share awards(99)(0.1)%12 — %74 0.1 %
Bank owned life insurance(872)(0.6)%(551)(0.4)%(371)(0.6)%
Investments in tax credit funds(352)(0.2)%(629)(0.5)%(381)(0.7)%
Captive insurance benefit(330)(0.2)%(421)(0.3)%(435)(0.8)%
Tax-exempt interest income(555)(0.4)%(921)(0.7)%(835)(1.5)%
Fixed asset depreciation— — %— — %(1,142)(2.0)%
Other, net 274 0.2 %94 0.1 %163 0.3 %
Income tax expense$31,763 21.9 %$27,349 21.3 %$9,415 16.5 %
Peoples’ reported income tax expense consisted of the following for the years ended December 31:
(Dollars in thousands)202320222021
Current income tax expense$32,001 $8,783 $6,541 
Deferred income tax (benefit) expense(238)18,566 2,874 
Income tax expense$31,763 $27,349 $9,415 
The significant components of Peoples’ deferred tax assets and deferred tax liabilities consisted of the following at December 31:
(Dollars in thousands)20232022
Deferred tax assets:  
Available-for-sale securities$31,774 $39,425 
Allowance for credit losses14,902 12,827 
Nonaccrual loan interest income2,753 4,366 
Accrued employee benefits7,344 3,391 
Lease obligation2,822 1,757 
Net operating loss carryforward11,367 158 
Purchase accounting adjustments1,920 — 
Other1,622 899 
Gross deferred tax assets$74,504 $62,823 
Valuation allowance$158 $158 
Total deferred tax assets$74,346 $62,665 
Deferred tax liabilities:  
Equipment leases$11,286 $16,316 
Deferred loan income3,117 5,512 
Purchase accounting adjustments— 4,431 
Bank premises and equipment5,116 3,206 
Lease right-of-use assets2,731 1,588 
Derivative instruments774 1,302 
Other3,951 2,259 
Total deferred tax liabilities$26,975 $34,614 
Net deferred tax asset$47,371 $28,051 
At December 31, 2023, Peoples had approximately $52 million of federal net operating loss carryforwards and $208,000 of federal tax credit carryforwards, the annual utilization of which are subject to limitation under IRC sections 382 and 383, respectively. Peoples has recorded a deferred tax asset only for the portion of these net operating loss and tax credit carryforwards it is able to, and expects to, utilize under these limitations. At December 31, 2023, Peoples had approximately $9.5 million of state net operating loss carryforwards, the annual utilization of which are subject to limitation under applicable state tax law. Peoples expects to fully utilize $7.3 million of these state net operating loss carryforwards. However, $2.2 million of state net operating loss carryforwards 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 $777,000 in 2023, $13,000 in 2022, and $181,000 in 2021.
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)20232022
Uncertain tax positions, beginning of year$89 $106 
Gross increase based on tax positions related to current year527 39 
Gross decrease due to the statute of limitations(89)(56)
Uncertain tax positions, end of year$527 $89 
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, 2020 through 2022. The years open to examination by state taxing authorities vary by jurisdiction.