Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 15 -- Income Taxes

The components of federal and state income tax expense for the years ended December 31, 2022, 2021, and 2020 were as follows (in thousands):

	2022			2021			2020
Current
Federal	$	14,401		$	12,269		$	12,315
State		6,171			6,384			7,120
Total current		20,572			18,653			19,435
Deferred
Federal		(2,005	)		(2,562	)		(3,318	)
State		(227	)		(793	)		(1,645	)
Total deferred		(2,232	)		(3,355	)		(4,963	)
Total	$	18,340		$	15,298		$	14,472

Recorded income tax expense differs from the expected tax expense (computed by applying the applicable statutory U.S. federal tax rate of 21% to income before income taxes). The principal reasons for the difference are as follows (in thousands):

	2022			2021			2020
Expected income taxes	$	19,172		$	14,025		$	12,546
Effects of:
Tax-exempt income from bank owned life insurance		(659	)		(575	)		(363	)
Other tax exempt income		(2,497	)		(2,072	)		(1,758	)
Nondeductible interest expense		255			17			45
State taxes, net of federal taxes		4,695			4,417			4,325
Other items		(2,525	)		(514	)		(323	)
Effect of marginal tax rate		(101	)		—			—
Total	$	18,340		$	15,298		$	14,472

Tax expense recorded by the Company during 2022 and 2020 did not include any interest or penalties. Tax expense recorded during 2021 included interest of approximately $2,100. Tax returns filed with the Internal Revenue Service and Illinois Department of Revenue are subject to review by law under a three-year statute of limitations. The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2019.

The tax effects of the temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2022 and 2021 are presented below (in thousands):

	2022		2021
Deferred tax assets:
Allowance for credit losses	$	16,248	$	12,957
Available-for-sale investment securities		61,880		339
Deferred compensation		4,157		4,025
Supplemental retirement		492		460
Deferred loan costs		302		—
Stock compensation expense		147		163
Deferred revenue		349		79
Purchase accounting		795		443
Acquisition costs		179		217
Other		894		1,139
Total gross deferred tax assets		85,443		19,822
Deferred tax liabilities:
Intangibles amortization		6,398		107
Prepaid expenses		1,418		6,480
FHLB stock dividend		22		985
Deferred expenses		104		23
Purchase accounting		—		915
Depreciation		4,911		3,463
Accumulated accretion		245		111
Mortgage servicing rights		91		118
Other		—		321
Available-for-sale investment securities		—		—
Total gross deferred tax liabilities		13,189		12,523
Deferred tax assets, net	$	72,254	$	7,299

No valuation allowance related to deferred tax assets was recorded at December 31, 2022 and 2021 as management believes it is more likely than not that the deferred tax assets will be fully realized.