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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The components of income tax expense for the years ended December 31, 2022 and 2021, are as follows:
In thousands20222021
Federal:  
Current$7,461 $6,189 
Deferred592 24 
8,053 6,213 
State:  
Current1,259 949 
Deferred(113)23 
1,146 972 
$9,199 $7,185 
Reconciliations of the statutory federal income tax to the income tax expense reported in the consolidated statements of income for the years ended December 31, 2022 and 2021, are as follows:
 Percentage of Income
before Income Taxes
 20222021
Federal income tax at statutory rate21.0 %21.0 %
State income taxes, net of federal benefit1.8 %2.2 %
Tax-exempt income(1.1)%(1.1)%
Earnings on investment in bank-owned life insurance(0.7)%(0.9)%
Tax credit benefits(0.6)%(0.8)%
Reduction of federal tax rate— %— %
Other0.1 %0.1 %
20.5 %20.5 %
Rehabilitation and low-income housing income tax credits were $281,000, during 2022 and 2021, respectively.
Components of deferred tax assets and liabilities at December 31 were as follows:
In thousands20222021
Deferred tax assets:  
Allowance for loan losses$4,128 $4,336 
Available for sale securities15,210 1,017 
Accrued deferred compensation1,064 1,126 
Lease liability731 — 
Pension1,608 1,714 
Deferred loan fees— 203 
Other-than-temporary impairment— 43 
Nonaccrual interest792 590 
Deferred director fees978 844 
Purchase accounting149 (1,112)
Other719 1,719 
25,379 10,480 
Deferred tax liabilities:  
Deferred loan fees66 — 
Accumulated depreciation208 354 
Prepaid benefit cost4,571 4,148 
Right of use asset731 — 
Prepaid expenses179 131 
Goodwill/intangibles1,462 1,333 
7,217 5,966 
Net Deferred Tax Asset included in Other Assets$18,162 $4,514 
The Corporation did not have any uncertain tax positions at December 31, 2022 and 2021. The Corporation’s policy is to recognize interest and penalties on unrecognized tax benefits in income tax expense in the Consolidated Statements of Income.
Years that remain open for potential review by the Internal Revenue Service are 2018 through 2021.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law making several changes to the Internal Revenue Code. The changes include, but are not limited to: increasing the limitation on the amount of deductible interest expense, allowing companies to carryback certain net operating losses, and increasing the amount of net operating loss carryforwards that corporations can use to offset taxable income.
The tax law changes in the CARES Act did not have a material impact on the Corporation’s income tax provision.