Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

	2021		2020
Allowance for credit losses	$	4,395	$	5,883
Deferred compensation payable	3,538		3,165
Underfunded pension liability	1,112		1,784
Accrued expenses	1,693		2,218
Other	4,876		4,543
Total Deferred Tax Assets	15,614		17,593
Unrealized securities gains	5,680		11,637
Other	9,871		9,158
Total Deferred Tax Liabilities	15,551		20,795
Net Deferred Tax Assets/(Liabilities)	$	63	$	(3,202)

    No material valuation allowances for deferred tax assets were recorded at December 31, 2021 or 2020 as the Company believes it is more likely than not that all of the deferred tax assets will be realized because they were supported by recoverable taxes paid in prior years.

Significant components of the provision for income taxes are as follows (in thousands): 

	2021		2020		2019
Current:
Federal	$	17,248	$	16,599	$	16,636
State	3,681		2,478		2,560
Total current tax expense	20,929		19,077		19,196
Total deferred tax expense	2,185		2,640		4,939
Income tax expense	$	23,114	$	21,717	$	24,135

    A reconciliation of the significant differences between the federal statutory income tax rate and the Company’s effective income tax rate is as follows (in thousands):

	2021			2020			2019
Computed federal taxes at statutory rate	$	23,351		$	23,376		$	23,832
State income taxes, net of federal tax benefit	3,124			2,070			2,376
Tax effects of:
Tax-exempt interest income	(1,177)			(944)			(733)
Bank-owned life insurance	(818)			(929)			(791)
Income tax credits	(1,449)			(1,113)			(889)
Other items, net	83			(743)			340
Income tax expense	$	23,114		$	21,717		$	24,135
Effective tax rate	20.8		%	19.5		%	21.3		%

The entire amount of the Company’s unrecognized tax benefits, if recognized, would favorably affect the Company’s effective tax rate.   The Company anticipates that it will release $0.6 million over the next 12 months.  A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in thousands):

	2021		2020
Beginning balance	$	2,089	$	1,807
Additions for current year tax positions	368		413
Additions for prior year tax positions	—		434
Decreases for prior year tax positions	(45)		—
Decreases related to lapse of applicable statute of limitation	(566)		(565)
Ending balance	$	1,846	$	2,089

Interest and penalties on income tax uncertainties are included in income tax expense.  During 2021, 2020 and 2019, the provision related to interest and penalties was approximately $0.1 million, $0.2 million and $0.6 million, respectively. The balance of accrued interest and penalties at December 31, 2021 and 2020 was $1.0 million and $0.9 million, respectively.

    The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and various state taxing authorities for the years ended December 31, 2018 and forward.