Income Taxes

12 Months Ended

Dec. 31, 2023

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):

	2023		2022
Allowance for credit losses	$	4,553	$	4,102
Deferred compensation payable	3,336		3,279
Accrued expenses	2,575		1,265
Unrealized securities losses	33,524		40,380
Other	8,602		6,012
Total Deferred Tax Assets	52,590		55,038
Goodwill and other intangible assets	4,180		4,284
Other	6,194		5,870
Total Deferred Tax Liabilities	10,374		10,154
Net Deferred Tax Assets/(Liabilities)	$	42,216	$	44,884

    No material valuation allowances for deferred tax assets were recorded at December 31, 2023 or 2022 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): 

	2023		2022		2021
Current:
Federal	$	27,156	$	20,481	$	17,248
State	4,349		3,313		3,681
Total current tax expense	31,505		23,794		20,929
Total deferred tax expense	(2,764)		1,469		2,185
Income tax expense	$	28,741	$	25,263	$	23,114

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):

	2023			2022			2021
Computed federal taxes at statutory rate	$	30,052		$	26,740		$	23,351
State income taxes, net of federal tax benefit	3,225			2,871			3,124
Tax effects of:
Tax-exempt interest income	(925)			(1,142)			(1,177)
Bank-owned life insurance	(1,268)			(1,167)			(818)
Income tax credits	(2,747)			(1,904)			(1,449)
Other items, net	404			(135)			83
Income tax expense	$	28,741		$	25,263		$	23,114
Effective tax rate	20.1		%	19.8		%	20.8		%

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 $0.4 million over the next 12 months.  A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in thousands):

	2023		2022
Beginning balance	$	1,619	$	1,846
Additions for current year tax positions	230		351
Decreases for prior year tax positions	(44)		(17)
Decreases related to lapse of applicable statute of limitation	(549)		(561)
Ending balance	$	1,256	$	1,619

Interest and penalties on income tax uncertainties are included in income tax expense.  During 2023, 2022 and 2021, the provision related to interest and penalties was not material in any period. The balance of accrued interest and penalties at December 31, 2023 and 2022 was approximately $1.0 million.

    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, 2020 and forward.