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Income Tax
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Tax Income Tax
December 31
2023		December 31
2022		December 31
2021
Income tax expense
Currently payable
Federal$14,980 $9,111 $11,742 
State(640)888 1,303 
Deferred
Federal(8,594)2,208 2,056 
State71 (31)255 
Revaluation of deferred tax assets5,201 — — 
Total income tax expense$11,018 $12,176 $15,356 
Reconciliation of federal statutory to actual tax expense
Federal statutory income tax at 21% $8,190 $22,173 $21,514 
Tax exempt interest(6,777)(6,623)(5,362)
Tax exempt BOLI income(779)(746)(604)
Stock compensation(88)(232)(250)
Revaluation of deferred tax assets5,201 — — 
Other tax exempt income(371)(454)(404)
State tax142 676 1,231 
Tax credit investments(2,976)(2,774)(981)
BOLI redemption ordinary income5,316 — — 
BOLI redemption excise2,532 — — 
Nondeductible and other628 156 212 
Actual tax expense$11,018 $12,176 $15,356 
December 31
2023		December 31
2022
Assets
Allowance for credit losses$12,546 $12,762 
Net operating loss and tax credits9,592 9,313 
Director and employee benefits2,471 2,019 
Unrealized loss on AFS securities and cash flow hedge17,706 28,230 
Basis in partnership equity investments1,322 — 
Capital loss carryover5,201 — 
Other2,856 555 
Total assets51,694 52,879 
Liabilities
Depreciation(4,512)(4,599)
State tax(253)(262)
Federal Home Loan Bank stock dividends(365)(368)
Difference in basis of intangible assets(4,545)(4,440)
Fair value adjustment on acquisitions(2,142)(2,807)
Other(1,131)(68)
Total liabilities(12,948)(12,544)
Valuation allowance(5,201)— 
Net deferred tax asset/(liability)$33,545 $40,335 
During 2023, the Company generated a state net operating loss of $6.2 million that may be carried forward for 15 years. The Company has federal general business tax credits of $9.6 million that can be carried forward twenty years and expire beginning in 2042.
During 2023, the Company generated a capital loss of $32.1 million as a result of the sale of investment securities owned by Horizon Investments, Inc. As a result of previously generated capital gains within the last three tax years, $7.3 million of the capital loss can be offset by those capital gains. The remaining $24.8 million is allowed to be carried forward for a period of five years to offset future capital gains that are recognized. The tax effect of this capital loss carryforward is $5.2 million. Management has concluded that a valuation allowance against this deferred tax attribute was required and will be reevaluated until it is more likely than not that the capital loss carryforward can be realized.
Retained earnings of the Bank include approximately $12.8 million for which no deferred income tax liability has been recognized. This amount represents an allocation of previously acquired institutions income to bad debt deductions as of December 31, 1987 for tax purposes only. Reductions of amounts so allocated for purposes other than tax bad debt losses including redemption of bank stock or excess dividends, or loss of “bank” status would create income for tax purposes only, which would be subject to the then-current corporate income tax rate. The unrecorded deferred income tax liability on the above amount for the Company was approximately $2.7 million at December 31, 2023.
The Company files income tax returns in the U.S. federal jurisdiction. With a 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 2020.