Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following is a summary of income tax expense for the years ended December 31, 2023, 2022, and 2021:

	December 31, 2023		December 31, 2022		December 31, 2021
Current – federal	$	11,446	$	15,494	$	13,494
Current – state	1,252		1,346		1,268
Deferred – federal	1,110		(1,618)		(1,025)
Deferred – state	1		(196)		(666)
Income tax expense	$	13,809	$	15,026	$	13,071

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, 2023		%		December 31, 2022		%		December 31, 2021		%
Tax at statutory rate	$	15,084	21.0	%	$	16,425	21.0	%	$	14,863	21.0	%
Tax exempt income, net	(1,090)		(1.5)		(1,036)		(1.3)		(1,016)		(1.4)
Bank owned life insurance	(619)		(0.9)		(721)		(0.9)		(554)		(0.8)
Tax credits, net of amortization	(173)		(0.3)		(193)		(0.3)		(215)		(0.3)
Effect of state tax	990		1.4		908		1.2		476		0.7
Other	(383)		(0.5)		(357)		(0.5)		(483)		(0.7)
Income tax expense	$	13,809	19.2	%	$	15,026	19.2	%	$	13,071	18.5	%

The following table sets forth deferred taxes as of December 31, 2023 and 2022:

	December 31, 2023		December 31, 2022
Deferred tax assets:
Allowance for credit losses	$	10,515	$	9,154
Fair value adjustments – business combination	771		917
Deferred compensation	3,693		3,448
Net operating loss carryover	516		344
Post-retirement benefits	605		647
Unrealized loss on equity securities	129		—
Nonaccrual loan interest	476		348
Accrued expenses	579		2,300
Deferred fees and costs	557		997
Unrealized loss on securities available-for-sale	11,308		12,914
Unrealized loss on securities held-to-maturity	1,108		1,265
Operating lease liability	8,509		7,645
Other	453		671
	39,219		40,650
Deferred tax liabilities:
Premises and equipment	3,761		3,409
Unrealized gain on equity securities	—		119
Intangibles – section 197	2,487		2,492
Mortgage servicing rights	345		399
Unrealized gain on interest rate swap	—		32
Operating lease asset	8,128		7,397
Other	571		68
	15,292		13,916
Net deferred tax asset	$	23,927	$	26,734

At December 31, 2023 and 2022, 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.

At December 31, 2023, the Corporation had state net operating loss carryforwards of $15.2 million related to the acquisition of Bank of Akron, which will expire at various dates from 2034 to 2039. The Corporation's ability to utilize carryforwards is limited to $363 thousand per year. Due to this limitation, management has determined it is more likely than not that approximately $9.5 million of net operating loss carryforwards will expire unutilized.

The Corporation recognizes interest and/or penalties related to income tax matters as part of income tax expense. At December 31, 2023, 2022, and 2021, there were no amounts accrued for interest and/or penalties and no amounts recorded as expense for the years ending December 31, 2023, 2022, and 2021.

The Corporation and its subsidiaries are subject to U.S. federal income tax, as well as filing various state returns. The Corporation is no longer subject to U.S. federal income tax examinations by the taxing authorities for years prior to 2020. Tax years 2020 through 2023 are open to examination.