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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Note 15 -- Income Taxes The components of federal and state income tax expense for the years ended December 31, 2023, 2022, and 2021 were as follows (in thousands):
|  | 2023 |  |  | 2022 |  |  | 2021 |
Current |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,189 |  |  | $ | 14,401 |  |  | $ | 12,269 |
State |  |  | 542 |  |  |  | 6,171 |  |  |  | 6,384 |
Total current |  |  | 2,731 |  |  |  | 20,572 |  |  |  | 18,653 |
Deferred |  |  |  |  |  |  |  |  |
Federal |  |  | 12,585 |  |  |  | (2,005 | ) |  |  | (2,562 | )
State |  |  | 4,154 |  |  |  | (227 | ) |  |  | (793 | )
Total deferred |  |  | 16,739 |  |  |  | (2,232 | ) |  |  | (3,355 | )
Total |  | $ | 19,470 |  |  | $ | 18,340 |  |  | $ | 15,298 |
Recorded income tax expense differs from the expected tax expense (computed by applying the applicable statutory U.S. federal tax rate of 21% to income before income taxes). The principal reasons for the difference are as follows (in thousands):
|  | 2023 |  |  | 2022 |  |  | 2021 |
Expected income taxes |  | $ | 18,565 |  |  | $ | 19,172 |  |  | $ | 14,025 |
Effects of: |  |  |  |  |  |  |  |  |
Tax-exempt income from bank owned life insurance |  |  | (1,035 | ) |  |  | (659 | ) |  |  | (575 | )
Other tax exempt income |  |  | (2,416 | ) |  |  | (2,497 | ) |  |  | (2,072 | )
Nondeductible interest expense |  |  | 799 |  |  |  | 255 |  |  |  | 17 |
State taxes, net of federal taxes |  |  | 3,710 |  |  |  | 4,695 |  |  |  | 4,417 |
Other items |  |  | (153 | ) |  |  | (2,525 | ) |  |  | (514 | )
Effect of marginal tax rate |  |  | — |  |  |  | (101 | ) |  |  | — |
Total |  | $ | 19,470 |  |  | $ | 18,340 |  |  | $ | 15,298 |
Tax expense recorded by the Company during 2023 included interest or penalties of approximately $307,000. Tax expense recorded by the Company during 2022 did no t include any interest or penalties. Tax expense recorded by the Company during 2021 included interest of approximately $2,100. Tax returns filed with the Internal Revenue Service, Illinois Department of Revenue and various other state jurisdictions are subject to review by law under a three-year statute of limitations. The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2020. The tax effects of the temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2023 and 2022 are presented below (in thousands):
|  | 2023 |  |  | 2022 |
Deferred tax assets: |  |  |  |  |  |
Allowance for credit losses |  | $ | 18,955 |  |  | $ | 16,248 |
Available-for-sale investment securities |  |  | 55,722 |  |  |  | 61,880 |
Deferred compensation |  |  | 4,128 |  |  |  | 4,157 |
Supplemental retirement |  |  | 519 |  |  |  | 492 |
Deferred loan costs |  |  | 222 |  |  |  | 302 |
Stock compensation expense |  |  | 82 |  |  |  | 147 |
Deferred revenue |  |  | 283 |  |  |  | 349 |
Purchase accounting |  |  | 5,326 |  |  |  | 795 |
Acquisition costs |  |  | 152 |  |  |  | 179 |
Lease liability |  |  | 3,975 |  |  |  | 4,381 |
Other |  |  | 1,305 |  |  |  | 823 |
Total gross deferred tax assets |  |  | 90,669 |  |  |  | 89,753 |
Less valuation allowance |  |  | (988 | ) |  |  | — |
Net deferred tax asset |  |  | 89,681 |  |  |  | 89,753 |
Deferred tax liabilities: |  |  |  |  |  |
Intangibles amortization |  |  | 6,432 |  |  |  | 6,398 |
Prepaid expenses |  |  | 1,576 |  |  |  | 1,418 |
FHLB stock dividend |  |  | 22 |  |  |  | 22 |
Deferred expenses |  |  | 104 |  |  |  | 104 |
Depreciation |  |  | 5,367 |  |  |  | 4,911 |
Accumulated accretion |  |  | 244 |  |  |  | 245 |
Mortgage servicing rights |  |  | 1,874 |  |  |  | 91 |
Right of use asset |  |  | 3,891 |  |  |  | 4,310 |
Other |  |  | 104 |  |  |  | — |
Total gross deferred tax liabilities |  |  | 19,614 |  |  |  | 17,499 |
Deferred tax assets, net |  | $ | 70,067 |  |  | $ | 72,254 |
As of December 31, 2023, the Company recorded a partial valuation allowance of $988,000 on the available-for-sale investments recorded in purchase accounting which management believes is more likely than not that the deferred tax asset will not be fully realized. No valuation allowance related to deferred tax assets was recorded at December 31, 2022.

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