Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following is a summary of income tax expense for the years ended December 31, 2021, 2020, and 2019: 

	December 31, 2021		December 31, 2020		December 31, 2019
Current – federal	$	13,494	$	8,681	$	8,265
Current – state	1,268		729		499
Deferred – federal	(1,025)		(1,672)		(204)
Deferred – state	(666)		(391)		0
Income tax expense	$	13,071	$	7,347	$	8,560

The reconciliation of income tax attributable to pre-tax income at the federal statutory tax rates to income tax expense is as follows: 

	December 31, 2021		%	December 31, 2020		%	December 31, 2019		%
Tax at statutory rate	$	14,863	21.0	$	8,419	21.0	$	10,214	21.0
Tax exempt income, net	(1,231)		(1.7)	(1,223)		(3.1)	(1,382)		(2.8)
Bank owned life insurance	(554)		(0.8)	(367)		(0.9)	(276)		(0.6)
Effect of state tax	476		0.7	576		1.4	394		0.8
Other	(483)		(0.7)	(58)		(0.1)	(390)		(0.8)
Income tax expense	$	13,071	18.5	$	7,347	18.3	$	8,560	17.6

The following table sets forth deferred taxes as of December 31, 2021 and 2020:

	December 31, 2021		December 31, 2020
Deferred tax assets:
Allowance for credit losses	$	7,606	$	6,751
Fair value adjustments – business combination	1,240		1,685
Deferred compensation	3,344		2,787
Net operating loss carryover	327		346
Post-retirement benefits	696		722
Unrealized loss on interest rate swap	81		161
Nonaccrual loan interest	509		478
Accrued expenses	1,718		681
Deferred fees and costs	1,259		1,613
Unrealized loss on securities available for sale	188		0
Operating lease liability	4,845		4,214
Other	383		300
	22,196		19,738
Deferred tax liabilities:
Unrealized gain on securities available for sale	0		4,077
Premises and equipment	3,093		2,997
Unrealized gain on equity securities	292		294
Intangibles – section 197	2,494		2,399
Mortgage servicing rights	366		321
Operating lease asset	4,649		4,079
Other	220		293
	11,114		14,460
Net deferred tax asset	$	11,082	$	5,278

At December 31, 2021 and 2020, the Corporation had no unrecognized tax benefits. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months.

At December 31, 2021, the Corporation had state net operating loss carryforwards of approximately $15.9 million related to the acquisition of Bank of Akron, which expire at various dates from 2034 to 2039. The Corporation's ability to utilize carryforwards is limited to $363 thousand per year. Due to this limitation, management determined it is more likely than not that approximately $9.5 million of net operating loss carryforwards will expire unutilized.

The Corporation recognizes interest and/or penalties related to income tax matters as part of income tax expense. At December 31, 2021, 2020 and 2019, there were no amounts accrued for interest and/or penalties and no amounts recorded as expense for the years ending December 31, 2021, 2020, and 2019.

The Corporation and its subsidiaries are subject to U.S. federal income tax, as well as filing various state returns. The Corporation is no longer subject to U.S. federal income tax examinations by the taxing authorities for years prior to 2018. Tax years 2018 through 2021 are open to examination.