Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The current and deferred components of income tax expense on the consolidated statements of income were as follows:

	For the Year Ended December 31,
(In thousands)	2022		2021		2020
Current:
Federal	$	12,334	$	16,555	$	15,197
State	1,489		1,709		1,474
Total	13,823		18,264		16,671
Deferred:
Federal	1,743		(622)		(1,720)
State	42		(15)		(41)
Total	1,785		(637)		(1,761)
Income tax expense	$	15,608	$	17,627	$	14,910

The income tax expense differs from the amount computed by applying the statutory federal income tax rate of 21.0% as a result of the following:

	For the Year Ended December 31,
(Dollars in thousands)	2022			2021			2020
Computed tax expense	$	16,180		$	18,195		$	15,623
Increase (reduction) in income taxes resulting from:
State taxes, net of federal benefit	1,209			1,338			1,132
Low income housing credits	(846)			(591)			(500)
Tax exempt income	(732)			(782)			(894)
Income from life insurance	(399)			(496)			(532)
Share-based awards	(100)			(103)			33
Other	296			66			48
Income tax expense	$	15,608		$	17,627		$	14,910
Income before income tax expense	$	77,047		$	86,641		$	74,396
Effective tax rate	20.3		%	20.3		%	20.0		%

Temporary differences between the financial statements carrying amounts and the tax bases of assets and liabilities gave rise to the following deferred tax assets and liabilities as of the dates indicated:

	December 31,
	2022				2021
(In thousands)	Asset		Liability		Asset		Liability
Net unrealized losses on AFS debt securities	$	36,027	$	—	$	321	$	—
Allowance for credit losses	8,640		—		7,837		—
Net operating loss and tax credit carryforward	7,913		—		8,741		—
Pension and other benefits	4,536		—		5,027		—
Deferred compensation and benefits	892		—		1,002		—
Deferred loan origination fees	—		(3,253)		—		(2,038)
Depreciation	—		(2,536)		—		(2,382)
Net unrealized (gains) losses on derivative instruments	—		(1,613)		528		—
Other	—		(389)		174		—
Gross deferred tax assets (liabilities)	$	58,008	$	(7,791)	$	23,630	$	(4,420)
Valuation allowance on deferred tax assets			—				—
Net deferred tax assets			$	50,217			$	19,210

At December 31, 2022 and 2021, the Company had $36.7 million and $40.5 million, respectively, in unused federal net operating losses that were acquired in 2015. Due to Internal Revenue Code Section 382(g) limitations, the Company's use of the federal net operating losses acquired is limited to $3.9 million annually, which was determined using the applicable federal rate and the fair value of consideration paid for the acquisition at the acquisition date. The acquired federal net operating losses will expire between 2030 and 2034. The Company expects that it will be able to fully utilize the acquired allowable federal net operating losses prior to expiration, as the Company has a history of generating taxable income well in excess of the limitation.

The Company continuously monitors and assesses the need for a valuation allowance on its deferred tax assets and, at December 31, 2022 and 2021 determined that no valuation allowance was necessary.

As of December 31, 2022, the Company's federal and state income tax returns for the years ended December 31, 2021, 2020 and 2019 were open to audit by federal and state authorities.