Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes

Income Taxes

NOTE 20 Income Taxes

The components of income tax expense (benefit) for the years ended December 31, 2023, 2022, and 2021 were as follows:

	Year ended
	December 31,
(dollars in thousands)	2023		2022		2021
Federal
Current	$	851	$	9,005	$	10,731
Deferred		1,151		727		2,212
Federal income tax		2,002		9,732		12,943
State
Current		2,415		2,298		2,879
Deferred		(259)		147		574
State income tax		2,156		2,445		3,453
Total income tax expense	$	4,158	$	12,177	$	16,396

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022 were as follows:

	December 31,		December 31,
(dollars in thousands)	2023		2022
Deferred Tax Assets
Allowance for credit losses	$	9,002	$	7,818
Employee compensation and benefit accruals		2,253		2,455
Expense accruals		327		417
Identifiable intangible amortization		2,176		3,363
Deferred loan fees		931		1,665
Net operating loss carry forwards		—		3
Nonaccrual loan interest		143		74
Unrealized loss on available‑for‑sale investment securities		24,548		33,056
Unrealized loss on derivative and hedge instruments		135		—
Unfunded commitment liability		1,913		814
Operating lease liabilities		1,486		—
Other		129		70
Total deferred tax assets from temporary differences		43,043		49,735
Deferred Tax Liabilities
Accumulated depreciation		737		835
Goodwill and intangible amortization		3,840		5,115
Servicing assets		530		663
Prepaid expenses		1,188		552
Operating lease right-of-use assets		1,539		—
Other		614		201
Total deferred tax liabilities from temporary differences		8,448		7,366
Net Deferred Tax Assets	$	34,595	$	42,369

The reconciliation between applicable income taxes and the amount computed at the applicable statutory Federal tax rate for years ending December 31, 2023, 2022, and 2021 was as follows:

	Year ended December 31,
	2023				2022				2021
			Percent of				Percent of				Percent of
(dollars in thousands)	Amount		Pretax Income		Amount		Pretax Income		Amount		Pretax Income
Taxes at statutory federal income tax rate	$	3,329	21.0	%	$	10,958	21.0	%	$	14,506	21.0	%
Tax effect of:
Tax exempt income		(715)	(4.5)	%		(514)	(1.0)	%		(556)	(0.8)	%
State income taxes, net of federal benefits		715	4.5	%		2,297	4.4			2,973	4.3	%
Nondeductible items and other		829	5.2	%		(564)	(1.1)			(527)	(0.8)	%
Applicable income taxes	$	4,158	26.2	%	$	12,177	23.3	%	$	16,396	23.7	%

It is the opinion of management that the Company has no significant uncertain tax positions that would be subject to change upon examination.