Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table presents the components of income taxes expense (benefit) for the years ended December 31, 2023, 2022 and 2021:

		Year Ended December 31,
($ in thousands)	Year Ended	2023		2022		2021
Current income tax expense:
Federal		$	6,238	$	7,959	$	9,243
State		3,332		4,374		4,885
Total current income tax expense		9,570		12,333		14,128
Deferred income tax expense (benefit):
Federal		217		783		(1,614)
State		(214)		298		(698)
Total deferred income tax expense (benefit)		3		1,081		(2,312)
Total income tax expense		$	9,573	$	13,414	$	11,816

The following table presents a reconciliation of the applicable statutory U.S. federal income tax rate to the effective tax rate for the periods indicated:

	Year Ended December 31,
	2023		2022		2021
Federal statutory income tax rate	21.0	%	21.0	%	21.0	%
Increase (decrease) in tax rate resulting from:
Meals and entertainment	0.2		—		—
State income taxes, net of federal tax benefit	8.0		8.4		8.5
Stock option expense and related excess tax benefits	0.1		—		0.1
Company owned life insurance	(0.4)		(0.2)		(0.1)
Other, net	(0.3)		(0.5)		(0.4)
Effective tax rate	28.6	%	28.7	%	29.1	%

The significant components of deferred tax assets and liabilities are reflected in the following table:

	December 31,
($ in thousands)	2023		2022
Deferred tax assets:
Organizational costs	$	18	$	20
Allowance for credit losses	6,502		5,688
Loans held for sale	—		852
Stock-based compensation	509		386
Accrued compensation	302		272
Lease liability	2,762		3,019
State taxes	675		989
Net unrealized loss on AFS debt securities	6,485		7,491
Nonaccrual loan interest income	224		46
Other	279		77
Total deferred tax assets	17,756		18,840
Deferred tax liabilities:
Loan origination costs	(1,110)		(1,407)
Depreciation	(553)		(423)
Right of use asset	(2,512)		(2,689)
Other	(272)		(5)
Total deferred tax liabilities	(4,447)		(4,524)
Net deferred tax asset	$	13,309	$	14,316

A valuation allowance for deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and tax planning strategies which will create taxable income during the periods in which those temporary differences become deductible. Management reevaluated all positive and negative evidence that existed and concluded all deferred tax assets are realizable. Therefore, no valuation allowance was necessary as of December 31, 2023 and 2022.

The Company is subject to U.S. Federal income tax as well as various state taxing jurisdictions. The Company is no longer subject to examination by Federal taxing authorities for tax years prior to 2020 and for state taxing authorities for tax years prior to 2019.

There were no significant unrealized tax benefits recorded as of December 31, 2023 and 2022, and the Company does not expect any significant increase in unrealized tax benefits in the next twelve months.