Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Note 18. Income Taxes

The following table presents the differences between the provision for income taxes at the federal statutory rate and the amounts computed as reported for the periods stated.

	For the years ended December 31,
(Dollars in thousands)	2021					2020
Income tax at federal statutory rate	$	14,317		21.0	%	$	4,725		21.0	%
Increase (decrease) resulting from:
State income taxes, net of federal tax effect		1,499		2.2	%		34		0.2	%
Tax-exempt interest income		(105	)	(0.2	%)		(20	)	(0.1	%)
Income from life insurance		(196	)	(0.3	%)		(82	)	(0.4	%)
Merger-related expenses		250		0.4	%		174		0.8	%
Other permanent differences		(68	)	(0.1	%)		(31	)	(0.1	%)
Provision for income taxes	$	15,697		23.1	%	$	4,800		21.4	%

The following table presents the significant components of the provision for income taxes for the periods stated.

	For the years ended December 31,
(Dollars in thousands)	2021		2020
Current tax provision
Federal	$	12,828	$	6,437
State		946		43
Total current tax provision		13,774		6,480
Deferred tax provision (benefit)
Federal		971		(1,680	)
State		952		—
Total deferred tax provision (benefit)		1,923		(1,680	)
Provision for income taxes	$	15,697	$	4,800

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table presents significant components of deferred tax assets and liabilities as of the dates stated.

	December 31,
(Dollars in thousands)	2021			2020
Deferred tax assets relating to:
Allowance for loan losses	$	2,470		$	2,478
Compensation differences		1,221			892
Reserve for loan sale buy backs		227			341
Acquisition accounting adjustments		3,463			255
Loan origination costs		67			81
Pass-through entities		487			252
Unrealized losses on securities available for sale and interest rate swaps		1,092			108
Other		872			191
Total deferred tax assets		9,899			4,598
Deferred tax liabilities relating to:
Premises and equipment, net		(2,885	)		(1,532	)
Core deposit and customer-based intangible assets		(1,549	)		(464	)
Mortgage servicing rights		(3,711	)		(1,488	)
Unrealized gains on other investments		(1,536	)		—
Other		(68	)		(25	)
Total deferred tax liabilities		(9,749	)		(3,509	)
Net deferred tax asset, included in other assets	$	150		$	1,089

Deferred income tax assets and liabilities are measured at the enacted tax rate for the period in which they are expected to reverse; therefore, as of December 31, 2021, they have been measured using the federal income tax rate enacted for subsequent years of 21% and applicable state income tax rates.

The Company had no net operating losses that can be carried forward and applied against future taxable income. The Company’s policy is to report interest and penalties, if any, related to uncertain tax positions in income tax expense in the consolidated statements of income. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2017. As of December 31, 2021 and 2020, the Company has no uncertain tax positions.

The Company’s net deferred tax asset, included in other assets in the consolidated balance sheets, was $150 thousand and $1.1 million at December 31, 2021 and 2020, respectively. As of December 31, 2021, management concluded that the Company’s deferred tax assets were fully realizable, and accordingly, no valuation allowance was recorded. The Company will continue to monitor deferred tax assets to evaluate whether it will be able to realize the full benefit of the deferred tax asset or whether there is any need for a valuation allowance. Significant negative trends in asset credit quality, losses from operations, or other factors could impact the realization of the deferred tax asset in the future.