Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 14 - INCOME TAXES

Income taxes were as follows for the years ended December 31:

	2022		2021		2020
Current	$	6,973	$	5,111	$	6,947
State		152		587		270
Deferred		483		1,319		(2,277	)
Income taxes	$	7,608	$	7,017	$	4,940

Effective tax rates differed from the statutory federal income tax rate of 21% in 2022, 2021 and 2020 due to the following:

	2022			2021			2020
Income taxes computed at the statutory federal tax    rate	$	9,878		$	9,988		$	7,798
Add (subtract) tax effect of:
Nontaxable interest income, net of nondeductible    interest expense		(1,666	)		(1,315	)		(1,293	)
Low income housing tax credit		(679	)		(1,402	)		(1,186	)
Cash surrender value of BOLI		(207	)		(252	)		(205	)
Other		282			(2	)		(174	)
Income tax expense	$	7,608		$	7,017		$	4,940

NOTE 14 - INCOME TAXES (Continued)

Year-end deferred tax assets and liabilities were due to the following:

	2022			2021
Deferred tax assets
Allowance for loan losses	$	6,106		$	5,595
Deferred compensation		1,143			1,213
Pension costs		—			56
Intangible assets		154			231
Net operating loss carryforward		699			—
Deferred loan fees		347			614
Unrealized gain on securities available for sale		14,218			—
Unrealized gain on securities purchased		1,966			258
Other		295			455
Deferred tax asset		24,928			8,422
Deferred tax liabilities
Tax depreciation in excess of book depreciation		(2,124	)		(973	)
Discount accretion on securities		(244	)		(86	)
FHLB stock dividends		(822	)		(969	)
Purchase accounting adjustments		(2,220	)		—
Unrealized gain on securities available for sale		—			(3,806	)
Prepaids		(334	)		(276	)
Other		(735	)		(1,243	)
Deferred tax liability		(6,479	)		(7,353	)
Net deferred tax asset	$	18,449		$	1,069

No valuation allowance was established at December 31, 2022 and 2021, due to the Company’s ability to carryforward net operating losses to taxes paid in future years and certain tax strategies, coupled with the anticipated future income as evidenced by the Company’s earning potential.

The Company files income tax returns in the U.S. Federal and various state jurisdictions. The Company records interest and penalties, if any, in other interest income.

There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company’s federal tax returns for taxable years through 2018 have been closed for purposes of examination by the Internal Revenue Service. At December 21, 2022, the Company had $3.3 million in net operating losses subject to 382 limitations. No valuation allowance is recorded as these are expected to be fully utilized and have no expiration.