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Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income tax expense consists of the following:
 For the Year Ended December 31,
 20202019
 (In Thousands)
Current:
Federal$1,948 $1,483 
State1,386 1,988 
Current tax expense3,334 3,471 
Deferred:
Federal(1,678)(1,979)
State(329)(317)
Deferred tax benefit(2,007)(2,296)
Total income tax expense$1,327 $1,175 
Deferred income tax assets and liabilities reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax basis. Deferred tax assets and liabilities are measured using enacted tax rates to apply to taxable income in the period in which the temporary differences are expected to be recovered or settled. Net deferred tax assets are included in accrued interest receivable and other assets in the Consolidated Balance Sheets.
The significant components of the Corporation’s deferred tax assets and liabilities were as follows:
 December 31, 2020December 31, 2019
 (In Thousands)
Deferred tax assets:
Allowance for loan and lease losses$7,276 $5,104 
SBA recourse reserve302 352 
Deferred compensation1,457 1,335 
State net operating loss carryforwards482 526 
Tax credit carryforwards1,831 2,881 
Non-accrual loan interest820 864 
Capital loss carryforwards21 22 
Unrealized losses on securities319 464 
Other356 531 
Total deferred tax assets before valuation allowance12,864 12,079 
Valuation allowance— — 
Total deferred tax assets12,864 12,079 
Deferred tax liabilities:
Leasing and fixed asset activities4,363 5,841 
Loan servicing asset358 337 
Other926 548 
Total deferred tax liabilities5,647 6,726 
Net deferred tax asset$7,217 $5,353 
The tax effects of unrealized gains and losses on securities are components of other comprehensive income. A reconciliation of the change in net deferred tax assets to deferred tax expense is as follows:
 December 31, 2020December 31, 2019
 (In Thousands)
Change in net deferred tax assets$1,864 $2,181 
Deferred taxes allocated to other comprehensive income143 115 
Deferred income tax benefit$2,007 $2,296 
Realization of the deferred tax asset over time is dependent upon the Corporation generating sufficient taxable earnings in future periods. In making the determination that the realization of the deferred tax was more likely than not, the Corporation considered several factors including its recent earnings history, its expected earnings in the future, appropriate tax planning strategies, and expiration dates associated with operating loss carryforwards.
The Corporation had state net operating loss carryforwards of approximately $7.7 million and $8.4 million at December 31, 2020 and 2019, respectively, which can be used to offset future state taxable income. The Corporation believes it will be able to fully utilize its Wisconsin state net operating losses under this law and therefore no valuation allowance has been established as of December 31, 2020.
The provision for income taxes differs from that computed at the federal statutory corporate tax rate as follows: 
 Year Ended December 31,
 20202019
 (Dollars in Thousands)
Income before income tax expense$18,305 $24,499 
Tax expense at statutory federal rate of 21% applied to income before income tax expense
$3,844 $5,145 
State income tax, net of federal effect837 1,321 
Tax-exempt security and loan income, net of TEFRA adjustments(648)(635)
Bank-owned life insurance(294)(252)
Tax credits, net(2,535)(4,503)
Other123 99 
Total income tax expense$1,327 $1,175 
Effective tax rate7.25 %4.80 %
There were no uncertain tax positions outstanding as of December 31, 2020 and 2019. As of December 31, 2020, tax years remaining open for the State of Wisconsin tax were 2016 through 2019. Federal tax years that remained open were 2017 through 2019. As of December 31, 2020, there were also no unrecognized tax benefits that are expected to significantly increase or decrease within the next twelve months.