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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the income tax for the Company consisted of the following at December 31:
20222021
(dollars in thousands)
Current tax expense$21,014 $10,383 
Deferred tax benefit(11,018)(3,011)
Total tax expense$9,996 $7,372 
At December 31, 2022 the current net income tax receivable was $1.3 million and at December 31, 2021 the net income tax payable was $1.2 million.
A reconciliation of the income tax expense (benefit) and the amount computed by applying the statutory federal income tax rate to the income before income taxes is as follows for the year ended December 31:
2022 2021
(dollars in thousands)
Amount Rate Amount Rate
Federal income tax at statutory rate$10,630 21.0 %$7,219 21.0 %
State income taxes523 1.0 256 0.7 
Effect of tax-exempt interest income(84)(0.2)(100)(0.3)
Stock-based compensation(987)(1.9)(43)(0.1)
Bank owned life insurance earnings(76)(0.2)(36)(0.1)
Excess executive compensation128 0.3 58 0.1 
Other(138)(0.3)18 0.1 
$9,996 19.7 %$7,372 21.4 %
The Company did not record or accrue any interest and penalties related to income taxes for the years ended December 31, 2022 or 2021. The Company and Bank have entered into a tax allocation agreement, which provides that income taxes shall be allocated between the parties on a monthly basis. The intent of this agreement is that each member of the consolidated group will incur no greater tax liability than it would have incurred on a stand-alone basis.
The net deferred tax asset consists of the following temporary differences and carryforward items at December 31:
20222021
(dollars in thousands)
Deferred tax assets:
Allowance for loan losses$17,076 $6,223 
Lease liability1,212 1,374 
Accrued expenses708 596 
Deferred compensation142 162 
Allowance for unfunded commitments225 277 
Nonqualified stock options108 107 
Interest on nonaccrual loans— 10 
Restricted stock options522 196 
Deferred income79 58 
Net unrealized loss on available-for-sale securities621 — 
Other218 37 
Total deferred tax assets20,911 9,040 
  
Deferred tax liabilities:  
Right of use asset(1,162)(1,327)
Depreciation and amortization(977)(661)
Net unrealized gain on equity security(314)(233)
Net unrealized gain on available-for-sale securities— (1)
Total deferred tax liabilities(2,453)(2,222)
Net deferred tax asset$18,458 $6,818 
The determination of the amount of deferred income tax assets which are more likely than not to be realized is primarily dependent on projections of future earnings, which are subject to uncertainty and estimates that may change given economic conditions and other factors. The realization of deferred income tax assets is regularly assessed and a valuation allowance is recorded if it is “more likely than not” that all or a portion of the deferred tax asset will not be realized. “More likely than not” is defined as greater than a 50% chance. All available evidence, both positive and negative is considered to determine whether, based on the weight of that evidence, a valuation allowance is needed. Based upon its analysis of available evidence, including recent profitability, management has determined that it is “more likely than not” that the Company’s deferred income tax assets as of December 31, 2022 will be fully realized and therefore no valuation allowance was recorded.
At December 31, 2022, the Company had no federal net operating loss carryforwards or tax credit carryforwards. The Company files federal and various state income tax returns. Federal tax returns for the 2019 tax year and later are open for examination. The total amount of unrecognized tax benefits, including interest and penalties, at December 31, 2022 was not material. The amount of tax benefits that would impact the effective rate, if recognized, is not expected to be material. The Company does not anticipate any significant changes with respect to unrecognized tax benefits within the next 12 months.