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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Income tax expense consisted of the following:
Years Ended December 31,
(Dollars in thousands)202220212020
Income tax expense:
Current$36,472 $37,812 $22,766 
Deferred(1,828)(5,832)(2,080)
Change in valuation allowance for deferred tax asset49 — — 
Income tax expense$34,693 $31,980 $20,686 
Effective tax rates differ from federal statutory rates applied to income before income taxes due to the following:
Years Ended December 31,
(Dollars in thousands)202220212020
Tax provision computed at federal statutory rate$28,771 $30,440 $17,789 
Effect of:
State taxes, net4,849 3,335 2,919 
Stock-based compensation(369)(1,778)(109)
Non-deductible executive compensation1,510 492 52 
Bank-owned life insurance(89)(332)(121)
Tax exempt interest(100)(201)(250)
Change in valuation allowance for deferred tax asset49 — — 
Other72 24 406 
Income tax expense$34,693 $31,980 $20,686 
Deferred income taxes reflect the net tax effects of temporary differences between the recorded amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:
(Dollars in thousands)20222021
Deferred tax assets
Federal net operating loss carryforwards$6,396 $7,231 
State net operating loss carryforwards1,534 1,458 
Stock-based compensation7,825 5,742 
Unrealized loss on securities available for sale2,163 — 
Allowance for credit losses11,825 11,341 
Accrued liabilities4,179 4,465 
Lease liability8,062 8,348 
Other3,405 707 
Total deferred tax assets45,389 39,292 
Deferred tax liabilities
Goodwill and intangible assets9,934 9,449 
Fair value adjustment on junior subordinated debentures2,237 2,324 
Premises and equipment6,339 4,786 
Acquired loan basis371 525 
Installment gain on sale of subsidiary— 626 
Lease right-of-use asset7,339 7,598 
Unrealized gain on securities available for sale— 1,023 
Derivative financial instruments— 1,475 
Indemnification asset935 1,123 
Other1,434 62 
Total deferred tax liabilities28,589 28,991 
Net deferred tax asset before valuation allowance16,800 10,301 
Valuation allowance(327)(278)
Net deferred tax asset$16,473 $10,023 
The Company's federal and state net operating loss carryforwards as of December 31, 2022 were $30,458,000 and $26,695,000, respectively, which will expire at various dates from 2031 through 2035, with the exception of $15,855,000 of net operating loss carryforwards that will not expire. The Company has a valuation allowance on certain net operating loss carryforwards that are not expected to be realized before expiration.
The Company's federal and state net operating loss carryforwards as of December 31, 2021 were $34,433,000 and $24,157,000, respectively.
An Internal Revenue Code Section 382 (“Section 382”) ownership change was triggered as part of previous acquisitions. A significant portion of the deferred tax asset relating to the Company's net operating loss carryforwards is subject to the annual limitation rules under Section 382. The utilization of tax carryforward attributes acquired from the EJ Financial Corp. (2010) acquisition is subject to an annual limitation of $341,000, with $2,667,000 of carryforwards remaining at December 31, 2022. The utilization of tax carryforward attributes acquired from the National Bancshares, Inc. (2013) acquisition is subject to an annual limitation of $2,040,000, with $11,936,000 of carryforwards remaining at December 31, 2022. The utilization of tax carryforward attributes acquired from HubTran, Inc. (2021) is subject to an annual limitation of $1,594,000, with $15,855,000 of carryforwards remaining at December 31, 2022.
The utilization of deferred tax assets related to the state net operating loss and tax credit carryforwards acquired from the ColoEast (2016) stock acquisition are subject to an annual limitation of $1,906,000 under Section 382 rules, with $2,445,000 of state carryforwards remaining at December 31, 2022.
At December 31, 2022 and 2021, the Company had no amounts recorded for uncertain tax positions and does not expect any material changes in uncertain tax benefits during the next 12 months. The Company recognizes interest and penalties related to income tax matters in income tax expense.
The Company is subject to U.S. federal income tax as well as income tax in various states. The Company is generally not subject to examination by taxing authorities for years prior to 2019.