Income taxes

12 Months Ended

Dec. 31, 2023

Income taxes

Income taxes

16. Income taxes:

The current and deferred amounts of the provision for income taxes expense for each of the years ended December 31, 2023, 2022 and 2021 are summarized as follows:

(Dollars in thousands)	2023		2022		2021
Current	$	3,853	$	6,665	$	9,548
Deferred		1,268		611		450
Total income tax expense	$	5,121	$	7,276	$	9,998

The components of the net deferred tax asset at December 31, 2023 and 2022 are summarized as follows:

(Dollars in thousands)	2023		2022
Deferred tax assets:
Allowance for loan losses	$	4,789	$	5,916
Lease liability		2,397		1,787
Defined benefit plan		1,635		1,798
Deferred compensation		694		860
Deferred loan fees and costs				59
Investment securities available for sale		11,270		14,266
Other		339		196
Total		21,124		24,882
Deferred tax liabilities:
Lease right-of-use assets		2,313		1,718
Premises and equipment, net		2,109		1,692
Merger related accounting		474		472
Deferred loan costs		92
Accrued compensation		1,912		1,872
Other		454		389
Total		7,354		6,143
Net deferred tax asset	$	13,770	$	18,739

A reconciliation between the amount of the effective income tax expense and the income tax expense that would have been provided at the federal statutory rate of 21.0 percent for the years ended December 31, 2023, December 31, 2022 and December 31, 2021 is summarized as follows:

		2023				2022				2021
(Dollars in thousands, except percents)	Amount		%		Amount		%		Amount		%
Provision for income tax at statutory rate	$	6,825	21.00	%	$	9,527	21.00	%	$	11,239	21.00	%
State tax, net of federal benefit		397	1.22			216	0.63			475	0.89
Tax exempt interest		(1,057)	(3.25)			(1,400)	(3.09)			(1,194)	(2.23)
Bank owned life insurance income		(221)	(0.68)			(205)	(0.45)			(119)	(0.22)
Residential housing program tax credits		(755)	(2.32)			(911)	(2.01)			(1,091)	(2.04)
Nondeductible transaction costs		179	0.55
Other, net		(247)	(0.76)			49	(0.04)			688	1.29
Total	$	5,121	15.76	%	$	7,276	16.04	%	$	9,998	18.69	%

The Company computes deferred income taxes under the asset and liability method. Deferred incomes taxes are recognized for tax consequences of “temporary differences” by applying enacted statutory tax rates to differences between the financial reporting and the tax basis of existing assets and liabilities. A deferred tax liability is recognized for all temporary differences that result in future taxable income. A deferred tax asset is recognized for all temporary differences that will result in future tax deductions subject to reduction of the asset by a valuation allowance.

The Company follows FASB ASC Topic 740 “Income Taxes,” which prescribes a threshold for the financial statement recognition of income taxes and provides criteria for the measurement of tax positions taken or expected to be taken in a tax return. ASC 740 also includes guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition of income taxes. The Company did not recognize or accrue any interest or penalties related to income taxes during the years ended December 31, 2023, 2022 and 2021. The Company does not have an accrual for uncertain tax positions as of December 31, 2023, 2022 or 2021, as deductions take or benefits accrued are based on widely understood administrative practices and procedures and are based on clear and unambiguous tax law. Tax returns for all years 2020 and thereafter are subject to examination by tax authorities.