Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

    Components of the provision for income taxes are as follows: 

(In Thousands)	Current Tax Expense (Benefit)	Deferred Expense (Benefit)	Total Expense
2023:
Federal	$1,120	$388	$1,508
State	944	192	1,136
Amortization of investment in low income housing tax credit partnerships	3,570	—	3,570
Total	$5,634	$580	$6,214
2022:
Federal	$1,412	$1,412	$2,824
State	860	698	1,558
Amortization of investment in low income housing tax credit partnerships	3,371	—	3,371
Total	$5,643	$2,110	$7,753
2021:
Federal	$5,090	($869)	$4,221
State	3,182	(429)	2,753
Amortization of investment in low income housing tax credit partnerships	3,502	—	3,502
Total	$11,774	($1,298)	$10,476

    The actual expense for 2023, 2022, and 2021, differs from the “expected” tax expense (computed by applying the U.S. Federal Statutory Tax Rate of 21% for the years ended December 31, 2023, 2022 and 2021) as follows: 

(In  Thousands)	2023	2022	2021
Computed “expected” income tax expense	$6,638	$8,084	$10,079
State income taxes, net	897	1,231	2,175
Tax-exempt interest on investment securities and loans	(459)	(358)	(238)
Amortization of investment in low income housing tax credit partnerships, net	3,192	3,191	3,163
Low income housing tax credits	(3,627)	(3,725)	(3,694)
Other	(427)	(670)	(1,009)
Total	$6,214	$7,753	$10,476

    The components of the net deferred tax asset are as follows:

(In  Thousands)	2023	2022	2021
Deferred Tax Asset:
Allowance for loan losses	$5,347	$4,263	$3,126
Loan fees, net of costs	649	778	1,956
Interest income, nonaccrual loans	356	370	482
Deferred compensation	1,674	1,822	1,344
Equity compensation	466	404	406
Operating lease liabilities	2,585	2,805	3,117
Accrued liabilities	941	1,286	1,826
Unrealized loss on available for sale investment securities	7,057	11,976	1,270
Unrealized loss on marketable equity securities	176	178	—
Other	280	285	837
Total Deferred Tax Asset	$19,531	$24,167	$14,364
Deferred Tax Liability:
Intangible amortization	($2,746)	($1,886)	($1,453)
Mortgage servicing rights	(6,065)	(5,789)	(4,172)
Depreciation and amortization	(1,463)	(1,261)	(1,515)
Operating lease right-of-use assets	(2,585)	(2,806)	(3,128)
Unrealized gain on available for sale investment securities	(139)	(11)	(189)
Unrealized gain on marketable equity securities	(50)	(18)	(159)
Other	(719)	(1,029)	(470)
Total Deferred Tax Liability	($13,767)	($12,800)	($11,086)
Net Deferred Tax Asset	$5,764	$11,367	$3,278

    A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized.  The primary source of recovery of the deferred tax asset will be future taxable income.  Management believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax asset.  The deferred tax asset is included in "Other assets" in the Consolidated Balance Sheets.

    As of December 31, 2023, the Company had no unrecognized tax benefits.

The tax years subject to examination by federal taxing authorities are the years ending December 31, 2023, 2022, 2021, and 2020. The tax years subject to examination by the State of Alaska are the years ending December 31, 2023, 2022, 2021, 2020, 2019 and 2018.