Income Taxes

12 Months Ended

Dec. 31, 2024

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
2024:
Federal	$3,995	($102)	$3,893
State	2,453	(50)	2,403
Amortization of investment in low income housing tax credit partnerships	3,727	—	3,727
Total	$10,175	($152)	$10,023
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

    The actual expense for 2024, 2023, and 2022, differs from the “expected” tax expense (computed by applying the U.S. Federal Statutory Tax Rate of 21% for the years ended December 31, 2024, 2023 and 2022) as follows: 

(In  Thousands)	2024	2023	2022
Computed “expected” income tax expense	$9,869	$6,638	$8,084
State income taxes, net	1,898	897	1,231
Tax-exempt interest on investment securities and loans	(456)	(459)	(358)
Amortization of investment in low income housing tax credit partnerships, net	3,105	3,192	3,191
Low income housing tax credits	(3,571)	(3,627)	(3,725)
Other	(822)	(427)	(670)
Total	$10,023	$6,214	$7,753

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

(In  Thousands)	2024	2023	2022
Deferred Tax Asset:
Allowance for loan losses	$6,284	$5,347	$4,263
Loan fees, net of costs	660	649	778
Interest income, nonaccrual loans	413	356	370
Deferred compensation	1,772	1,674	1,822
Equity compensation	502	466	404
Operating lease liabilities	1,996	2,585	2,805
Accrued liabilities	1,967	941	1,286
Unrealized loss, net of gains on available for sale investment securities	3,295	6,918	11,965
Unrealized loss, net of gains on marketable equity securities	—	126	160
Other	234	280	285
Total Deferred Tax Asset	$17,123	$19,342	$24,138
Deferred Tax Liability:
Intangible amortization	($3,112)	($2,746)	($1,886)
Mortgage servicing rights	(8,024)	(6,065)	(5,789)
Depreciation and amortization	(1,051)	(1,463)	(1,261)
Operating lease right-of-use assets	(1,990)	(2,585)	(2,806)
Unrealized gain, net of loss on marketable equity securities	(6)	—	—
Other	(763)	(719)	(1,029)
Total Deferred Tax Liability	($14,946)	($13,578)	($12,771)
Net Deferred Tax Asset	$2,177	$5,764	$11,367

    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, 2024, the Company had no unrecognized tax benefits.

The tax years subject to examination by federal taxing authorities and by the State of Alaska are the years ending December 31, 2024, 2023, 2022, and 2021.