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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Summary of Income Tax (Benefit) Expense

The Company files federal income tax returns on a calendar year basis. Income tax expense for the years indicated is summarized as follows:

(dollars in thousands)						2023						2022						2021
Current						$	10,722					$	9,792					$	9,754
Deferred						(33)						(882)						2,544
HTC						(303)						—						—
NMTC						(480)						(480)						(480)
Total income tax expense						$	9,906					$	8,430					$	11,818

Summary of Deferred Tax Asset

The components of the Company’s net deferred tax asset, which is included in accrued interest receivable and other assets in the accompanying Statement of Financial Condition at December 31 of the years indicated are as follows:

(dollars in thousands)						2023						2022
Deferred tax assets:
Provision for loan losses						$	7,168					$	6,581
Discount on purchased loans						822						1,277
Salary continuation plan						657						676
Mortgage servicing rights						30						47
Deferred compensation						5						5
Stock-based compensation						260						262
Unrealized loss on securities available for sale						9,121						11,501
Net operating loss acquired						334						499
HTC						41						—

(dollars in thousands)						2023						2022
Other						219						382
Deferred tax assets						$	18,657					$	21,230
Deferred tax liabilities:
FHLB stock dividends						$	(169)					$	(78)
Accumulated depreciation						(3,280)						(3,362)
Intangible assets						(842)						(1,123)
Derivatives						(778)						(1,053)
NMTC						(159)						(130)
Other						(46)						(46)
Deferred tax liabilities						(5,274)						(5,792)
Net deferred tax asset						$	13,383					$	15,438

Summary of Provision for Federal Income Taxes

For the years ended December 31, 2023, 2022 and 2021, the Company’s provision for federal income taxes differed from the amount computed by applying the federal income tax statutory rate of 21% on income from operations as indicated in the following analysis:

(dollars in thousands)						2023						2022						2021
Federal tax based on statutory rate						$	10,658					$	8,994					$	12,773
State tax based on statutory rate						175						151						97
(Decrease) increase resulting from:
HTC						(303)						—						—
NMTC						(480)						(480)						(480)
Effect of tax-exempt income						(155)						(276)						(196)
Changes in the cash surrender value of bank owned life insurance						(219)						(192)						(547)
Nondeductible merger-related expenses						—						41						30
Nondeductible share based compensation expense						161						188						180
Exercise of stock options						(50)						(37)						(23)
Other						119						41						(16)
Income tax expense						$	9,906					$	8,430					$	11,818
Effective tax rate						19.8		%				19.8		%				19.6		%

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- Definition

Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

+ References

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-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Paragraph 9
-Section 50
-Publisher FASB
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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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