Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following is a summary of income tax expense for the years ended December 31, 2020, December 31, 2019, and December 31, 2018: 

	December 31, 2020		December 31, 2019		December 31, 2018
Current – federal	$	8,290	$	8,265	$	7,520
Current – state	729		499		66
Deferred – federal	(1,672)		(204)		(1,076)
Income tax expense	$	7,347	$	8,560	$	6,510

The reconciliation of income tax attributable to pre-tax income at the federal statutory tax rates to income tax expense is as follows: 

	December 31, 2020		%	December 31, 2019		%	December 31, 2018		%
Tax at statutory rate	$	8,419	21.0	$	10,214	21.0	$	8,448	21.0
Tax exempt income, net	(1,223)		(3.1)	(1,382)		(2.8)	(1,403)		(3.5)
Bank owned life insurance	(367)		(0.9)	(276)		(0.6)	(296)		(0.7)
Effect of state tax	576		1.4	394		0.8	52		0.1
Other	(58)		(0.1)	(390)		(0.8)	(291)		(0.7)
Income tax expense	$	7,347	18.3	$	8,560	17.6	$	6,510	16.2

The following table sets forth deferred taxes as of December 31, 2020 and December 31, 2019 based on the U.S. statutory federal income tax rate of 21%.

	December 31, 2020		December 31, 2019
Deferred tax assets:
Allowance for credit losses	$	6,751	$	4,014
Fair value adjustments – business combination	1,685		854
Deferred compensation	2,787		2,405
Net operating loss carryover	346		0
Post-retirement benefits	722		754
Unrealized loss on interest rate swap	161		102
Nonaccrual loan interest	478		557
Accrued expenses	681		1,210
Deferred fees and costs	1,613		472
Operating lease liability	4,214		4,216
Other	300		381
	19,738		14,965
Deferred tax liabilities:
Unrealized gain on securities available for sale	4,077		1,913
Premises and equipment	2,997		2,089
Unrealized gain on trading securities	294		340
Intangibles – section 197	2,399		2,305
Mortgage servicing rights	321		330
Operating lease asset	4,079		4,136
Other	293		259
	14,460		11,372
Net deferred tax asset	$	5,278	$	3,593

At December 31, 2020 and December 31, 2019, the Corporation had no unrecognized tax benefits. The Corporation does not expect the total amount of unrecognized tax benefits to significantly increase in the next twelve months.

The Corporation recognizes interest and/or penalties related to income tax matters as part of income tax expense. At December 31, 2020, 2019 and 2018, there were no amounts accrued for interest and/or penalties and no amounts recorded as expense for the years ending December 31, 2020, 2019, and 2018.

The Corporation and its subsidiaries are subject to U.S. federal income tax, as well as various filing various state returns. The Corporation is no longer subject to examination by the taxing authorities for years prior to 2016. Tax years 2017 through 2020 are open to examination.