Income Tax

12 Months Ended

Dec. 31, 2022

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, 2022, 2021 and 2020:

	2022			2021			2020
Reconciliation of Federal Statutory to Actual Tax Expense:
Federal Statutory Income Tax at 21%	$	53,692		$	50,566		$	35,695
Tax-exempt Interest Income	(19,349)			(16,200)			(13,273)
Stock Compensation	(214)			(20)			338
Earnings on Life Insurance	(2,344)			(1,468)			(1,079)
Tax Credits	(414)			(354)			(425)
CARES Act - NOL carryback rate differential	—			—			(1,178)
State Tax	2,494			2,697			1,122
Other	(280)			38			175
Income Tax Expense	$	33,585		$	35,259		$	21,375
Effective Tax Rate	13.1		%	14.6		%	12.6		%

Income tax expense consists of the following components for the years ended December 31, 2022, 2021, 2020:

	2022		2021		2020
Income Tax Expense for the Year Ended December 31:
Currently Payable:
Federal	$	21,824	$	24,634	$	28,463
State	2,696		1,473		2,647
Deferred:
Federal	8,604		7,211		(8,508)
State	461		1,941		(1,227)
Income Tax Expense	$	33,585	$	35,259	$	21,375

Significant components of the net deferred tax assets and liabilities resulting from temporary differences were as follows at December 31, 2022 and 2021:

	2022		2021
Deferred Tax Asset at December 31:
Assets:
Differences in Accounting for Loan Losses	$	61,484	$	52,995
Differences in Accounting for Loan Fees	2,094		2,016
Deferred Compensation	3,922		4,172
Federal & State Income Tax Loss Carryforward and Credits	600		747
Net Unrealized Loss on Securities Available for Sale	62,323		—
Other	2,883		3,585
Total Assets	133,306		63,515
Liabilities:
Differences in Depreciation Methods	7,039		5,726
Differences in Accounting for Loans and Securities	1,058		3,078
Difference in Accounting for Pensions and Other Employee Benefits	3,687		4,586
State Income Tax	1,859		1,499
Net Unrealized Gain on Securities Available for Sale	—		15,889
Gain on FDIC Modified Whole Bank Transaction	287		306
Other	9,919		8,108
Total Liabilities	23,849		39,192
Net Deferred Tax Asset	$	109,457	$	24,323

As of December 31, 2022, the Corporation has approximately $12.2 million of state NOL carryforwards available to offset future state taxable income, which will expire beginning in 2024. These NOL carryforwards along with normal timing differences between book and tax result in total state deferred tax assets of $8.9 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, for which no deferred federal income tax liability has been recognized. 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, federal income taxes may be imposed at the then applicable tax rate. The unrecorded deferred tax liability at December 31, 2022, 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 2019.

Additional details regarding the Corporation's policies related to income taxes are discussed in NOTE 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES of these Notes to Consolidated Financial Statements.