INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The components of income tax expense were as follows:

(In thousands)	2023		2022
Current:
Federal	$	7,924	$	7,461
State	(534)		1,259
Total	7,390		8,720
Deferred:
Federal	755		592
State	16		(113)
Total	771		479
Provision for income taxes	$	8,161	$	9,199

The differences between the ETR and the federal statutory income tax rate are as follows:

	2023		2022
Federal income tax at statutory rate	21.0	%	21.0	%
State income taxes, net of federal benefit	1.5		1.8
Tax-exempt income	(1.3)		(1.1)
Earnings on investment in bank-owned life insurance	(1.0)		(0.7)
Tax credit benefits	—		(0.6)
Other	0.3		0.1
Effective income tax rate	20.5	%	20.5	%

The net deferred tax asset recorded by the Corporation is included in other assets and consists of the following tax effects of temporary differences as of December 31:

(In thousands)	2023		2022
Deferred tax assets:
Investment securities available for sale	$	12,052	$	15,210
Allowance for credit losses	4,533		4,128
Accrued deferred compensation	1,166		1,064
Pension	1,162		1,608
Deferred director fees	1,097		978
Other	783		719
Lease liability	742		731
Nonaccrual interest	740		792
Allowance for unfunded commitments	390		—
Accumulated depreciation	3		—
Purchase accounting	—		149
Total gross deferred tax assets	22,668		25,379
Deferred tax liabilities:
Prepaid benefit cost	4,552		4,571
Goodwill and intangibles, net	1,439		1,462
Right of use asset	742		731
Prepaid expenses	67		179
Deferred loan fees	57		66
Accumulated depreciation	—		208
Purchase accounting	25		—
Total gross deferred tax liabilities	6,882		7,217
Net deferred tax asset	$	15,786	$	18,162

Rehabilitation and low-income housing income tax credits were $14 thousand and $281 thousand, during 2023 and 2022, respectively.

The Corporation did not have any uncertain tax positions at December 31, 2023 and 2022. The Corporation’s policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the Consolidated Statements of Income.

The Corporation and its subsidiaries are subject to U.S. federal income tax as well as income tax of the states for which income is derived. The Corporation is no longer subject to examination by taxing authorities for year before 2019.