Income Tax

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Tax

Income Tax

	December 31 2022		December 31 2021		December 31 2020
Income tax expense
Currently payable
Federal	$	9,111	$	11,742	$	16,914
State	888		1,303		2,377
Deferred
Federal	2,208		2,056		(7,970)
State	(31)		255		(1,451)
Total income tax expense	$	12,176	$	15,356	$	9,870
Reconciliation of federal statutory to actual tax expense
Federal statutory income tax at 21%	$	22,173	$	21,514	$	16,457
Tax exempt interest	(6,623)		(5,362)		(4,090)
Tax exempt BOLI income	(746)		(604)		(531)
Stock compensation	(232)		(250)		(160)
Other tax exempt income	(454)		(404)		(334)
State tax	676		1,231		733
Tax credit investments	(2,774)		(981)		(2,284)
Nondeductible and other	156		212		79
Actual tax expense	$	12,176	$	15,356	$	9,870

	December 31 2022		December 31 2021
Assets
Allowance for loan losses	$	12,762	$	13,707
Net operating loss and tax credits	9,313		—
Director and employee benefits	2,019		2,094
Unrealized loss on AFS securities and cash flow hedge	28,230		—
Other	555		1,785
Total assets	52,879		17,586
Liabilities
Depreciation	(4,599)		(4,540)
State tax	(262)		(261)
Federal Home Loan Bank stock dividends	(368)		(371)
Difference in basis of intangible assets	(4,440)		(3,476)
Fair value adjustment on acquisitions	(2,807)		(3,435)
Unrealized gain on AFS securities and cash flow hedge	—		(1,953)
Other	(68)		(222)
Total liabilities	(12,544)		(14,258)
Net deferred tax asset/(liability)	$	40,335	$	3,328

During 2022, the Company generated a state net operating loss of $6.2 million that may be carried forward for 15 years. Additionally, the Company generated tax credits resulting in a carryforward of $9.0 million. These credits may be carried forward for 20 years. The Company expects to generate sufficient taxable income in the future to utilize the losses and credit carryforwards.

Retained earnings of the Bank include approximately $12.8 million for which no deferred income tax liability has been recognized. This amount represents an allocation of previously acquired institutions income to bad debt deductions as of December 31, 1987 for tax purposes only. Reductions of amounts so allocated for purposes other than tax bad debt losses including redemption of bank stock or excess dividends, or loss of “bank” status would create income for tax purposes only, which would be subject to the then-current corporate income tax rate. The unrecorded deferred income tax liability on the above amount for the Company was approximately $2.7 million at December 31, 2022.

The Company files income tax returns in the U.S. federal jurisdiction. With a few exceptions, the Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2019.