Income Tax

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Tax

INCOME TAX

The reconciliation between income tax expense expected at the U.S. federal statutory tax rate and the reported income tax expense is summarized in the following table for years ended December 31, 2020, 2019 and 2018:

	2020			2019			2018
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal Statutory Income Tax at 21%	$	35,695		$	40,695		$	39,509
Tax-exempt Interest Income	(13,273)			(10,124)			(8,347)
Stock Compensation	338			(459)			(622)
Earnings on Life Insurance	(1,079)			(953)			(868)
Tax Credits	(425)			(263)			(615)
CARES Act - NOL carryback rate differential	(1,178)			—			—
State Tax	1,122			600			(1,219)
Other	175			(171)			1,161
Income Tax Expense	$	21,375		$	29,325		$	28,999
Effective Tax Rate	12.6		%	15.1		%	15.4		%

Income tax expense consists of the following components for the years ended December 31, 2020, 2019, 2018:

	2020		2019		2018
Income Tax Expense for the Year Ended December 31:
Currently Payable:
Federal	$	28,463	$	23,938	$	23,633
State	2,647		422		1,842
Deferred:
Federal	(8,508)		4,726		6,723
State	(1,227)		239		(3,199)
Income Tax Expense	$	21,375	$	29,325	$	28,999

Significant components of the net deferred tax assets and liabilities resulting from temporary differences were as follows at December 31, 2020 and 2019:

	2020		2019
Deferred Tax Asset at December 31:
Assets:
Differences in Accounting for Loan Losses	$	31,850	$	19,717
Differences in Accounting for Loan Fees	4,328		442
Deferred Compensation	4,038		4,436
Federal & State Income Tax Loss Carryforward and Credits	2,089		6,205
Other	3,185		3,499
Total Assets	45,490		34,299
Liabilities:
Differences in Depreciation Methods	6,028		5,240
Differences in Accounting for Loans and Securities	2,840		1,192
Difference in Accounting for Pensions and Other Employee Benefits	1,258		1,556
State Income Tax	1,059		778
Net Unrealized Gain on Securities Available for Sale	23,389		10,333
Gain on FDIC Modified Whole Bank Transaction	359		413
Other	6,209		6,506
Total Liabilities	41,142		26,018
Net Deferred Tax Asset	$	4,348	$	8,281

As of December 31, 2020, the Corporation has approximately $19.3 million of state NOL carryforwards available to offset future state taxable income, which will expire beginning in 2022. These NOL carryforwards along with normal timing differences between book and tax result in total state deferred tax assets of $5.0 million. Management believes it is more likely than not that the benefit of these state NOL carryforwards and other state deferred tax assets will be fully realized.

The Corporation has additional paid-in capital that is considered restricted resulting from the acquisitions of CFS and Ameriana of approximately $13.4 million and $11.9 million, respectively. CFS and Ameriana qualified as banks under provisions of the Internal Revenue Code which permitted them to deduct from taxable income an allowance for bad debts which differed from the provision for losses charged to income. No provision for income taxes had been provided. If in the future this portion of additional paid-in capital is distributed, or the Corporation no longer qualifies as a bank for income tax purposes, income taxes may be imposed at the then applicable tax rates. The unrecorded deferred tax liability at December 31, 2020, would have been approximately $5.3 million.

The Corporation or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state jurisdictions.  The Corporation is generally no longer subject to U.S. federal, state and local income tax examinations by tax authorities for tax years before 2017.