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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company files income tax returns in the U.S. federal jurisdiction and the State of Maryland. With few exceptions, the Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years prior to 2021.
The following table provides information on components of income tax expense for the years ended December 31, 2024 and 2023.
($ in thousands)December 31, 2024December 31, 2023
Current tax expense:
Federal$4,264 $172 
State1,681 63 
5,945 235 
Deferred income tax expense:
Federal6,570 1,692 
State2,300 1,029 
8,870 2,721 
Total income tax expense $14,815 $2,956 
The following table provides a reconciliation of tax computed at the statutory federal tax rate to the actual tax expense for the years ended December 31, 2024 and 2023.
December 31, 2024December 31, 2023
Tax at federal statutory rate21.0 %21.0 %
Tax effect of:
Tax-exempt income(1.4)(3.6)
State income taxes, net of federal benefit5.4 6.1 
Bargain purchase gain— (13.1)
Nondeductible compensation costs0.1 3.9 
Nondeductible merger-related expenses— 2.6 
Other0.1 3.9 
Actual income tax expense rate25.2 %20.8 %
The following table provides information on significant components of the Company’s deferred tax assets and liabilities as of December 31, 2024 and 2023.
($ in thousands)December 31, 2024December 31, 2023
Deferred tax assets:  
Allowance for credit losses$14,888 $14,534 
Write-downs of OREO— 33 
Nonaccrual loan interest 578 344 
Lease liabilities3,035 3,326 
Deferred compensation4,078 4,160 
Federal net operating loss— 6,528 
State net operating loss2,066 2,448 
Deferred loan fees2,078 1,775 
Acquisition fair value adjustments24,988 30,452 
Unrealized losses on available for sale securities2,844 2,825 
Other1,233 1,398 
Total deferred tax assets55,788 67,823 
Deferred tax liabilities:
Depreciation4,115 4,320 
Right-of-use assets2,918 3,229 
Mortgage servicing rights1,505 1,541 
Acquisition fair value adjustments1,651 2,401 
Intangibles11,223 13,611 
Other575 999 
Total deferred tax liabilities21,987 26,101 
Less: valuation allowance$(1,944)$(1,015)
Net deferred tax assets$31,857 $40,707 
Management of the Company has determined a full valuation allowance is required for the holding company’s state deferred tax assets, largely associated with its state net operating losses. As the holding company files in the state of Maryland on separate entity basis and has not had and does not expect to have taxable income in that jurisdiction for the foreseeable future, the Company believes, at the current and prior period end, it was more likely than not that the holding company’s state deferred tax assets will not be realized. This valuation allowance increased from $1.0 million to $1.9 million during the year ended December 31, 2024. Based on the Company’s analysis, no other valuation allowances have been recorded as the Company expects to realize its remaining federal and state deferred tax assets.
The Company has analyzed the tax positions taken or expected to be taken in its income tax returns for the periods ending December 31, 2024 and 2023, and has recorded no liabilities related to uncertain tax positions in accordance with the applicable guidance in ASC 740, Income Taxes.